The Panama Canal (International Straits of The World) - Martinus Nijhoff (2010)

The Panama Canal
International Straits
of the World
Series Editor
Gerard J. Mangone
VOLUME 15
The Panama Canal

By
Robert W. Aguirre
LEIDEN BOSTON
2010
This book is printed on acid-free paper.

Library of Congress Cataloging-in-Publication Data.
The Panama Canal / edited by Robert W. Aguirre III.
p. cm. (International straits of the world ; v. 15)
Includes index.
ISBN 978-90-04-17728-4 (hardback : alk. paper) 1. Panama Canal (Panama)
International status. 2. Panama Canal (Panama)History. 3. Canal Zone. 4. Canals,
InteroceanicHistory. 5. Environmental policyPanama. 6. Environmental law
Panama. I. Aguirre, Robert W.
KZ3715.P38 2010
972.875dc22
2010032093
ISBN: 978 90 04 17728 4

Copyright 2010 by Koninklijke Brill NV, Leiden, The Netherlands.
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The titles published in this series are listed at the back of this volume, and also at:
www.brill.nl/insw
CONTENTS
List of Figures and Maps ...................................................................
Foreword by Gerard J. Mangone .....................................................
Acknowledgments ...............................................................................
ix
xi
xiii
1. Introduction ...................................................................................
A. Straits in Comparative Perspective ......................................
B. The Three Circumstances of a Strait: Environments,
Flows, and Territoriality ........................................................
C. Conclusion ................................................................................
1
1
9
15
PART ONE
THE ENVIRONMENT OF A STRAIT

2. The Environment of the Isthmus of Panama ...........................
A. Introduction .............................................................................
B. How a Strait Became an Isthmus 16 Million Years Ago ....
C. How an Isthmus Became an Artificial Strait One Hundred
Years Ago .................................................................................
D. Why an Artificial Strait Will Reach Maximum Sustainable
Capacity Between 2009 and 2012 Unless Enhanced .........
E. Conclusion ................................................................................
19
19
20
25
38
43
PART TWO
FLOWS THROUGH THE ENVIRONMENT

3. Interoceanic Flows in Transit Through Panamas HumanBuilt Environment .........................................................................
A. Introduction .............................................................................
B. The Royal Road and Cruces Trail 15401740 ....................
C. The Panama Railroad 18521869 .........................................
D. The Panama Canal 1914date ...............................................
E. Conclusion ................................................................................
47
47
47
51
54
63
vi
contents
PART THREE
TERRITORIALITY OVER FLOWS THROUGH

THE ENVIRONMENT
4. Panamanian Territoriality in Geographic Perspective ............
A. Maritime-Commercial and Territorial-Administrative
Societies .....................................................................................
B. The Two Panamas Under the Viceroyalty of Peru
Until 1717 .................................................................................
C. The Two Panamas Under the Viceroyalty of New Granada
Until Panamanian Independence in 1821 ..........................
D. The Two Panamas Under Great Colombia (18191831) ...
E. Conclusion ................................................................................
67
67
74
78
80
82
5. American Territoriality in Geographic Perspective ................ 85

A. Territorial Enlargement, Political Regimes, and
Interoceanic Transportation .................................................. 85
B. Territoriality and Territorial Enlargement ......................... 91
C. Conclusion ................................................................................ 101
6. The Expansion of the Powers of the Federal Government
Over Inland Transportation from the 1780s to the 1880s .....
A. Introduction .............................................................................
B. Expansion of the Powers of the Federal Government
Over Transportation During the 1st republic
(1780s1820s) ..........................................................................
C. Expansion of the Powers of the Federal Government
Over Transportation During the 1st democracy
(1830s1870s) ..........................................................................
D. Expansion of the Powers of the Federal Government
Over Other Buffer Zones .......................................................
E. The 1888 Supreme Court Decision in California v.
Central Pacific Railroad Company .......................................
F. Conclusion ................................................................................
103
103
106
109
118
119
123
7. Interoceanic Transportation and The Two Panamas

Under the 1st democracy (1830s1870s) ................................ 125
A. American Territoriality Over Interoceanic Transportation
During the 1st democracy (1830s1870s) ......................... 125
contents
vii
B. The Two Panamas Under the Centralized Republic of

New Granada (18311858) ................................................. 136
C. The Two Panamas Under the Federalist Grenadine
Confederation (18581863) and United States of
Colombia (18631886) ......................................................... 147
D. Conclusion ............................................................................. 149
8. Interoceanic Transportation and the Two Panamas Under
the 2nd republic (1870s1930s) Before Panamanian
Independence ...............................................................................
A. American Territoriality Over Interoceanic
Transportation .......................................................................
B. The Two Panamas Under the Republic of Colombia
(18861903) ...........................................................................
C. The Two Panamas Under the Republic of Panama ........
D. Conclusion .............................................................................
9. The Extraterritorial Expansion of the Powers of the Federal
Government Over the Maritime Environment after the
1880s ..............................................................................................
A. Introduction ...........................................................................
B. The Extraterritorial Expansion of the Powers of the
Federal Government Over Islands, Straits, and Sea
Lanes During the 2nd republic (1870s1930s) ..............
C. Conclusion .............................................................................
10. The Panama Canal and The Two Panamas Under the 2nd
republic (1870s1930s) After Panamanian Independence ....
A. American Extraterritoriality through the 1903 HayBunau-Varilla Treaty ............................................................
B. The Panama Canal and Canal Zone ..................................
C. The Two Panamas During an Era of Political
Opposition Among the Elite 1900s to 1930s ...................
D. Conclusion .............................................................................
151
151
161
168
169
171
171
173
186
189
189
190
201
216
11. The Panama Canal and The Two Panamas Under the 2nd
democracy (1930s1970s) ......................................................... 219
Transportation Under the 2nd democracy
(1930s1970s) ........................................................................ 219
viii
contents
B. The Two Panamas During an Era of Social Rivalry
between Non-Elite and Elite from the 1930s to the
1960s .......................................................................................
C. The Two Panamas Under the National Guard Until
1981 .........................................................................................
D. American Territoriality and the 1977 Panama Canal
Treaties ...................................................................................
E. Conclusion .............................................................................
12. The Panama Canal and The Two Panamas Under the 3rd
republic (1980?) ........................................................................
Transportation During the 3rd republic (1980?) ........
B. The Two Panamas Under the Panamanian Defense
Forces Until 1989 ..................................................................
C. The Two Panamas after the Abolishment of the
Panamanian Defense Forces ...............................................
D. Conclusion .............................................................................
13. The Future of the Panama Canal as an Artificial Strait ........
A. Changes in Panamas Environment and Competition
from Other Routes ................................................................
B. Panamanian Societies and American Policy Regimes ....
C. Conclusion .............................................................................
221
239
243
247
251
251
253
256
270
273
273
276
284
Appendix .............................................................................................. 285

Index ..................................................................................................... 289
LIST OF FIGURES AND MAPS

1. Straits of the International Straits of the World .....................
2. The physical and human-built environment of the
contemporary Panama Canal ....................................................
3. The physical environment of Panama in 1901 before
American construction ...............................................................
4. Flows on the Royal Road and Las Cruces Trail, the Panama
Railroad, and the Panama Canal ..............................................
5. Monthly tonnage through the Panama Canal 19142008 ......
6. The top twelve trade routes through the Panama Canal by
tonnage 19262008 ......................................................................
7. Toll revenue in adjusted dollars by vessel market segment
19292008 .....................................................................................
8. Percentage of U.S. foreign waterborne trade through the
Panama Canal 19502005 ..........................................................
9. The Isthmus of Panama and the two Panamas ......................
10. The upland savannas of the Panamanian interior .................
11. American policy regimes 1780sdate .......................................
12. Territorial buffer zones and expansion during the 1st
republic (1780s1820s) ..............................................................
13. Territorial consolidation and transportation improvements
during the 1st republic (1780s1820s) ...................................
14. Territorial consolidation and transportation improvements
during the 1st democracy (1830s1870s) ..............................
15. Transcontinental railroad land grants, equivalent to Canal
Zones in the West ......................................................................
16. Extraterritorial buffer zones and expansion during the 2nd
republic (1870s1930s) ..............................................................
17. The Panama Canal and Canal Zone in 1938 .........................
18. Employees of the Panama Canal by rate of pay 19061996 ....
19. Tonnage and toll revenues from Panama Canal operations
19452008 .....................................................................................
20. Revenues, toll revenues, and expenses from Panama Canal
operations from 19142008 ......................................................
4
11
31
50
55
56
59
62
68
72
87
92
105
111
116
183
191
200
261
265
FOREWORD
This is the fifteenth book in the series International Straits of the World,
organized and edited at the College of Earth, Ocean, and Environment
at the University of Delaware. Thirty-one years have passed since the
publication of the first pioneering study of The Northeast Arctic Passage, followed by analyses of virtually every major natural strait in the
world. The present book by Dr. Robert Aguirre describes an artificial
strait, one of the several inter-oceanic straits like Kiel and Suez that
have their peculiar characteristics, notably not subject to the 1982 UN
Law of the Sea Convention, yet subject to international law and legal
logic that will respond to geographic and historical circumstances.
I have been fortunate in selecting Dr. Aguirre as the author of this
robust and comprehensive study of the Panama Canal. He received his
Ph.D. in Geography from the Louisiana State University and has served
with national distinction as a professional geographer for the National
Oceanic and Atmospheric Administration (NOAA) in Washington,
D.C. and Seattle. He has worked within the field of geospatial analysis
and geovisualization, which gives special merit to his analysis of the
Isthmus of Panama and the Canal from a physical and environmental
perspective. He has conducted field research in the Republic of Panama and has authored many scholarly publications on maritime and
coastal geography. Presently Dr. Aguirre is an independent scholar, a
lecturer at the University of Washington where he conducts funded
research on geographic technology and social sciences.
What the reader will find most interesting and unique about this
book on the Panama Canal, different from all others, are not only facts
and figures about the trade, traffic, tonnage, capital, and revenues of
the Canal since its opening in 1914, but also a complete analysis of
how environment, flows, and territoriality affect a strait. Moreover, the
author has threaded throughout his work, the politics of ColumbiaPanama showing economic and ethnic differences in the population
affecting attitudes and Panamanian government. He has detailed a history of United States policy towards Panama through what he calls
the periods of the First Republic, First Democracy, Second Republic,
Second Democracy, and Third Republic beginning in 1980. The author
has painstakingly reported on every treaty and other international
xii
foreword
agreement for interoceanic communication through Central and South

America beginning in 1836 up to the Hay-Herran Treaty of 1903,
which are listed in the Appendix.
Beginning in 2000, all ownership and operations of the Canal were
transferred to Panama in accordance with the April 1978 treaty between
Panama and the United States. The United States continues to have
unilateral rights to interpose militarily against any threat of aggression
against the free and neutral use of the Canal. A Senate reservation to
the treaty emphasized the right of the United States to take any necessary action if the Canal were closed or its operation interrupted.
After a proposal by the Panama Canal Authority and approval by the
Panama executive, legislature, and a public referendum, the Third Set
of Locks project was set in motion in late 2006. A capital investment
of $5.2 billion will be required with the intention to capture more tonnage and tolls, increase the revenues to the Panama government, and
make the Canal safer, more efficient, and productive. Whether these
hopes will be realized only time, technology, and trade will tell. Under
the best circumstances, the East Coast ports of the United States might
gain additional trade with Asia.
This series on International Straits of the World began with a modest grant from the Rockefeller Foundation, which was exhausted many
years ago. Nevertheless I want to thank the Foundation for its initial
support that has led to fifteen books on a subject of worldwide political and economic interest. I also want to compliment Dr. Aguirre,
the author, for his discipline in the prompt submission of manuscript,
careful review and response to editing, and complete cooperation in
the production of this outstanding work. To my loyal secretary, Jacqueline Bijansky, I owe a debt of thanks for her transcriptions of the
manuscript, ever efficient and faithful to the task.
Gerard J. Mangone
University of Delaware
Newark, Delaware
10 April 2010
ACKNOWLEDGMENTS
As in any acknowledgements, there are many people and organizations
that deserve mention. I will confine myself to mentioning those who
been most persistent and instrumental in bringing this particular book
to publication, beginning with my friend Dr. Leonard J. Hochberg. He
was Edward Foxs protg at Cornell University in Ithaca, thus it was
no accident of fortune that I embarked upon Foxs theoretical ideas
and their application in other parts of the world. Dr. Hochbergs masterful ability to bridge the past and present in ways that others fail to
see are the stuff of lore; and in playing part Siren and part Scylla, he
managed to sway me to avoid delay and end my decades wander from
an earlier unpublished work that I significantly revised and expanded.
I also greatly benefitted from the ideas of Dr. Carville Earle as he was
in the process of completing his final book, a copy of which he sent
back to me with an inscription I hope I am fulfilling.
I am particularly grateful to Dr. Gerard J. Mangone for his encouragement and support in adding an artificial strait to the edited
series. The opportunity was perfectly framed by Dr. Mangone and I
am delighted that this work has found its true home in comparative
perspective with other straits. In the course of my research, I availed
myself of the public archives at the former Panama Canal Commissions Technical Resources Center in Panama City, the Library of Congress and National Archives in Washington, D.C. and College Park,
MD, as well as map and digital resources at Louisiana State University
in Baton Rouge and the University of Washington in Seattle.
Finally, I must reluctantly acknowledge Lisa Atkinson, Nicole,
Mary, and Robert Aguirre Jr., Brittany, Logan, Sal, Blazer von Titan,
Audrey, Diego, Robby, Robbie, and the Griffin; who patiently albeit
involuntarily are still awaiting these particular wanders to come to a
mercifully non-metaphorical conclusion.
Robert W. Aguirre III
Seattle, Washington
30 March 2010
CHAPTER ONE
INTRODUCTION
Damn! Were in a tight spot.
George Clooney, in the role of Odysseus, in the film
O Brother, Where Art Thou? (2000)
A. Straits in Comparative Perspective

A strait, from a geographic and legal perspective, is any narrow and
natural maritime passage between land areas connecting two parts of
the high seas.1 When foreign vessels on the high seas pass through a
strait they must cross the water domain of adjacent land territories.
Thus straits pose an interesting circumstance, both physiographic and
geopolitical. Straits put the autonomy of navigation on the high seas
and the reach of non-adjacent maritime power in contention with
assertions of political power from adjacent land territories. These circumstances have posed an irresistible subject of debate since the time
of Grotius and Selden during the early 17th century, when control
over the worlds straits was a source of contention among great maritime powers and adjacent states.2
There are interesting parables about the circumstances of straits.
In Homers Odyssey, Odysseus is confronted with making a choice
between Scylla and Charybdis, two inescapable monsters that live on
either side of the strait his ship must pass through. Scylla lives in the
adjacent rocks and has six long heads that can strike quickly. Charybdis lives underwater and at various times during the day can create a
powerful whirlpool. Odysseus is advised by the gods to take the most
1
R. R. Baxter and Jan F. Triska. The Law of International Waterways: With Particular Regard to Interoceanic Canals (Cambridge: Harvard University Press, 1964).
See definition by Baxter and Triska (1964, 3). See also Donat Pharand and Leonard
H. Legault, The Northwest Passage: Arctic Straits (Dordrecht: Martinus Nijhoff Publishers, 1984), 90.
2
The two ideological positions are those of Grotius in Mare liberum, the freedom
of the sea, published in 1609, and Selden in Mare clausum, closed or territorial sea,
published in 1635.
chapter one
logical course of action and stick close to the adjacent rocks to avoid
Charybdis. The lesson of the myth is that when faced with choosing
between two unfavorable options, e.g., two monsters, the best course
of action is to imagine the worst consequences of being wrong. Better
to sacrifice six men than risk losing the entire ship.
Myths and fables like Scylla and Charybdis about the menace of
monsters versus the rights of passage of heroes are simple parables
about the logical situation of a strait. We are told what is just and what
is unjust in the stories, but we are not given an explanation of the true
nature of the circumstances. Unfortunately, it is not difficult to find
explanations about the Panama Canal that cast its history in similar
sorts of silly morality plays between the greedy Panamanian and the
intrepid American, or the poor Panamanian and the Yankee imperialist. In reality, reference to universal laws or principles of moral justice
does not explain the source of territorial maneuvers and confrontations over straits. Imperatives of societies and states are attenuated by
promises to abide by conventions of international law, but circumstances change and so do legal conventions.
The first volume in the International Straits of the World book
series, of which this book is a part, appeared in print at a time when
the world was negotiating rights of passage through straits at the
19731982 Third United Nations Conference on the Law of the Sea
(UNCLOS).3 It was important, at the time, to examine the general legal
principles discussed at the Third UNCLOS on a case by case basis.
The International Straits of the World book series undertook an in
depth comparison with a broad sample of straits from different parts
of the world, each with unique geographic characteristics and histories
of use in international navigation. Comparative investigation revealed
fascinating similarities with respect to how different societies spanning the globe from Australia to Turkey and from Chile to Korea have
dealt with the geographic circumstances of a strait. Figure 1 illustrates
the 15 straits covered to date in the International Straits of the World
Series, beginning in 1978 and including the present volume, with the
Panama Canal listed as number 15 (numbered straits are referenced
in chronological order of publication).4
3
See William E. Butler, Northeast Arctic Passage (Alphen aan den Rijn: Sijthoff
and Noordhoff, 1978).
4
Straits listed include: 15. The Panama Canal, Robert W. Aguirre (c. 2010); 14. The
Russian Arctic Straits, R. Douglas Brubaker (2005); 13. The Legal Regime of the Turkish
introduction
There have been doubts that comparisons could be made between

straits and interoceanic canals, international waterways created
through human endeavor to connect two parts of the high seas but
typically residing within the territorial jurisdiction of one state. One
of the purposes of the present study is to remove this doubt and compare the history of the Panama Canal to other straits as a special class
of strait, i.e., the artificial strait. Almost a decade before the Third
UNCLOS, Baxter and Triska published their idea that the Panama
Canal, the Suez Canal, and the Kiel Canal were artificial straits.5
Obviously, both interoceanic canals and natural straits connect two
parts of the seas. However, Baxter and Triskas perspective was that
this geographic circumstance, though interesting, did not alter the fact
that straits and interoceanic canals belonged in two completely different categories. Interoceanic canals like the Panama, Suez, and Kiel
Canals are not subject to the same rules under international law nor
are they subject to the provisions of the Law of the Sea, which were
intended for natural straits.6
It has been three decades since the Third UNCLOS and the 1982
Convention of the Law of the Sea. This book is not meant as a reference work of the conventions that states have promised to abide by in
their use of the Panama Canal. This book first and foremost regards
the Panama Canal as an artificial strait comparable in all respects to
natural straits. The book also considers that states and societies with
different motivations can change conventions of international law, and
that legal principles are adaptable to fit the needs of geographic and
historical circumstances.7
Straits, Nihan nl (2002); 12. The Torres Strait, Stuart B. Kaye (1997); 11. The Strait
of Magellan, Michael A. Morris (1989); 10. The Korean Straits, Chi Young Pak (1988);
9. The Turkish Straits, C. L. Rozakis and Petros N. Stagos (1987); 8. The Strait of
Dover, Luc Cuyvers (1986); 7. The Northwest Passage: Arctic Straits, Donat Pharand
and Leonard H. Legault (1984); 6. The Baltic Straits, Gunnar Alexandersson (1982); 5.
The Red Sea and the Gulf of Aden, Ruth Lapidoth (1982); 4. The Strait of Gibraltar and
the Mediterranean, Scott C. Truver (1980); 3. The Persian Gulf and the Strait of Hormuz, Rouhollah K. Ramazani (1979), 2. Malacca, Singapore and Indonesia, Michael
Leifer (1978); 1. Northeast Arctic Passage, William E. Butler (1978).
5
Baxter (1964, 1) notes, Not content with these channels, man has constructed a
number of artificial straits, or canals, where an isthmus may be pierced to afford easy
access between two portions of the high seas. Baxter also (1964, 11) says, As inland
canals may be considered to be artificial forms of rivers, so may interoceanic canals
be regarded in a geographic sense as artificial straits.
6
Baxter and Triska (1964, 185).
7
This follows from a turn of phrase in Baxter and Triska (1964).
1. Straits of the International Straits of the World
4
chapter one
introduction
1. Natural and Artificial Straits

Just as timely as the 19731982 Third UNCLOS was to previous books
in the International Straits of the World series is the fact that, as of the
date of the writing of this book, the Panama Canal Authority (Autoridad del Canal de Panam) is undergoing a $5.25 billion capacity
improvement project scheduled to be completed by 2014 called the
Third Set of Locks Project. Two-thirds of the total estimated cost will
go towards construction of larger locks with water saving basins ($3.35
billion), with the rest going towards improvement of the canals Atlantic and Pacific Ocean access channels, interior navigation channels,
and its supply of freshwater from Gatun Lake.8 The Panama Canal
Authoritys Third Set of Locks Project suggests something so obvious
that its importance can be overlooked. Interoceanic canals have to be
administered, operated, maintained, and improved periodically with
massive capacity improvement projects in order to continue to be
safe, effective, and economically viable. The same can be said of natural
straits. Natural straits also have to be administered, operated, maintained, and improved through things like enforcing fiscal, customs,
immigration, and environmental regulations; installing navigational
aids; establishing sea lanes and traffic separation schemes; providing
pilot and tug services; removing wrecks or responding to oil spills; and
dredging or icebreaking.9
Baxter and Triskas insight regarding interoceanic canals as artificial straits can be turned completely around if, rather than regarding
the Panama Canal as an artificial strait we regard natural straits as
artificially-enhanced. The extent to which natural straits become artificially-enhanced is something that Baxter and Triska never fully contend
with. Straits are supposedly natural and do not require human modification, whereas interoceanic canals are entirely works of mankind.10
8
The English version is published by the Panama Canal Authority, Proposal for
the expansion of the Panama Canal: Third Set of Locks Project, 24 April 2006 (Panama
City: Panama Canal Authority, 2006). The longer Spanish version is published by
Autoridad del Canal de Panam, Plan Maestro del Canal de Panam, 7 June 2006
(Panama City: Panama Canal Authority, 2006).
9
See Ruth Lapidoth-Eschelbacher, The Red Sea and the Gulf of Aden (Dordrecht:
Martinus Nijhoff Publishers, 1984), 140.
10
For examples see Baxter and Triska (1964, 27, 37). It is curious that even though
Baxter and Triska (1964) do not suggest natural straits can be artificially-enhanced,
they find it possible to consider artificially-enhanced rivers and degrees of artificiality between inland waterways, for instance see Baxter and Triska (1964, 11).
chapter one
Since Baxter and Triskas publication, increases in the size and number of oceangoing vessels have required natural harbors and channels
to undergo extensive modification, making it necessary to see many
natural straits as more artificially-enhanced than natural.
If we take Baxter and Triskas two separate categories of straits (natural and artificial) and add a hybrid category in the middle, the result
is a gradient of straits described as natural, artificially-enhanced, or
artificial. Without becoming distracted into the legal meaning of the
word natural, with at least these three categories of straits in mind
it becomes possible to compare the environment of the Panama Canal
with that of any other narrow and natural waterway that connects the
high seas and is useful for international navigation.11
2. International Court of Justice Decision in the 1949
Corfu Channel Case
If a narrow natural water passage connects two bodies of the high
seas, or a body of territorial sea with the high seas, it qualifies as a
strait useful for international navigation under international law and
vessels have the right to pass through adjacent states territorial waters
without previous authorization. In its well-known decision in the
1949 Corfu Channel case between Britain and Albania, the International Court of Justice (ICJ) considered, separately, whether the Corfu
Channel met the necessary physiographic criteria as a strait; and then
whether actual international use of the Corfu Channel demonstrated
sufficient interest to merit passage rights for foreign vessels (see strait
labeled A in Figure 1).
The key to the ICJ decision in the Corfu Channel case was the separation of geographic criteria concerning the physiographic role a
strait plays in connecting two parts of the high seas, from functional
criteria concerning sustained use of a strait for international navigation.12 After the Corfu Channel case it became customary legal practice
to separate a straits geographical and functional characteristics. The
geographic and functional definition of a strait in the Corfu Channel case was the foundation for a 1956 report by the United Nations
11
Interestingly, Lapidoth-Eschelbacher (1982, 247 note 3) says, It might be asked

whether semi-natural waterways should be assimilated to natural straits or to artificial
canals.
12
See Pharand and Legault (1984).
introduction
International Law Commission, which was retained in all of its major

points by the 1958 Geneva Convention on the Territorial Sea and the
Contiguous Zone, which in turn was carried forward by the 1982 Convention of the Law of the Sea.13
A straits geography and function for international transits are not,
however, the only two defining circumstances to consider. Baxter and
Triska suggest that a strait is really only a strait when it is completely closed off by the territorial seas of the adjacent coastal states
thus requiring a legal regime for rights of passage. There were obviously global territoriality concerns at play in the Corfu Channel case
in which Albania presumably closed off the strait to British vessels
with mines. The dispute between Britain and Albania occurred at the
onset of the Cold War, which places the ICJs consideration of the
case in a geopolitical context.14 The point of mentioning the Cold War
context of the case is that it seems more accurate to say that the Corfu
Channel case could have been separated into the sum of not two parts,
but three, including: geographic characteristics of a strait meaning
the unique physiographic circumstances that compels the spatial juxtaposition of a nations vessels in transit over the high seas with the
territorial waters or jurisdiction of adjacent nations; functional characteristics of a strait referring to flows of goods by vessels in transit
along suitable routes of navigation; and most importantly, territoriality of a strait, a very broad term referring to anything from mundane navigation rules imposed by the adjacent sovereign states over
the channel to the geopolitical maneuvers of non-adjacent maritime
powers to close off a channel to its non-adjacent rivals.
13
Christos L. Rozakis and Petros N. Stagos, The Turkish Straits (Dordrecht: Martinus Nijhoff Publishers, 1987).
14
Lapidoth-Eschelbacher (1982) relays the context of the Corfu Channel case stating that Greece had made territorial claims to part of Albanian territory bordering the
channel, and that Greece had declared itself technically in a state of war with Albania.
Lapidoth-Eschelbacher (1982, 1423) arrives at the conclusion that, The question
has not been solved by treaty or case law, and therefore the answer must be sought in
the practice of states. Hochberg (personal communication 2009) notes the timing of
the Corfu Channel case unfolding on the eve of the Cold War, and given the political
actors in Albania at the time and their relationship with the Soviet Union, versus British support for Greece, suggests there were many larger global geopolitical dimensions
to the territorial issues at stake. For a book that specifically examines territoriality
over straits between adjacent and non-adjacent states, see Yaacov Vertzberger, Coastal
states, regional powers, superpowers, and the Malacca-Singapore straits (Berkeley: University of California Press, 1984).
chapter one
There has been a strong tendency, as generally noted by many legal

scholars and formalized by the 1982 Convention of the Law of the
Sea, to deal with only the bare minimum of circumstances in terms of
relationships between flows and the geographic circumstances posed
by a strait and ignore the circumstances of territoriality. The 1982
Convention of the Law of the Sea established five normative scenarios
juxtaposing hypothetical transits through a rudimentary physiographic
configuration, in which one or more adjacent states had extended their
territorial jurisdiction out into the sea, sometimes with offshore islands
just to complicate matters further.15 The Corfu Channel case was notably different in that the ICJ went further and considered the properties and attributes of vessel transits themselves, attempting to establish
some minimum criteria for what constitutes sustained international
use in practice in order to be considered a strait under international
law. However, the ICJ case did not deal with any of the properties of
the adjacent or non-adjacent states involved in terms of conflicting
territorialities.
Baxter and Triska, among other authors, have gone a little bit further in considering the impact of territoriality by pointing out that
some interoceanic canals during their history were subject to an international operating or supervisory agency, while others were owned
and operated wholly by the adjacent sovereign state. They compared
the administration of the Suez, Panama, and Kiel Canals as well as the
St. Lawrence Seaway in five case studies of different types of operating or supervisory agencies including: 1) administration by a private
company (Suez Canal), 2) operation of an interoceanic canal by a foreign sovereign (Panama Canal), 3) operation of interoceanic canals
by the territorial sovereign (Kiel and Suez Canals), 4) operation of an
international waterway through international coordination (St. Lawrence Seaway), and finally 5) international administration through
international commissions. But artificial straits can change from one
type of operating regime to another. The operating regimes of the Suez
and Panama Canals changed and are in the same operation by the
territorial sovereign category as the Kiel Canal. What explains how
an operating regime or other aspects of territoriality over a strait can
change?
15
See Pharand and Legault (1984) for a visual explanation.
introduction
B. The Three Circumstances of a Strait: Environments,

Flows, and Territoriality
The word strait can mean a position of personal difficulty, perplexity, distress, or need, a.k.a., a tight spot, often referring to financial
difficulties and almost always used in the plural such as dire straits.
If one were to reflect on use of the word straits in ordinary language,
it would be synonymous with the word circumstances.16
A comparative understanding of straits used for international navigation might begin in the following way by borrowing from use of
the word straits to mean circumstances. A strait combines a set of
circumstances including but not merely limited to a narrow water
passage between adjacent land areas that connects two parts of the
high seas or a body of sea with the high seas. What are the curious
resemblances and parallels in the histories of the Strait of Gibraltar,
the Northwest Passage, and the Korean Straits because of these physiographic circumstances? Each of the preceding fourteen volumes in
the International Straits of the World book series described in great
detail a set of conditions, situations, or a state of affairs existing in
and around narrow water passages used for international navigation.
What is needed is a comparative framework. The framework used as
the three parts of this book defines a strait as a convergence of three
major circumstances between 1) elements of the environment, 2) what
flows through that environment, and 3) a regime of territoriality over
both the environment and what flows through it.
1. Elements of the Environment
Everything in and around a strait happens in a set of physical and
human-built environments that inhabit or impact a narrow water
passage connecting the high seas. Environments contain both living
and non-living elements and they share relationships or interact with
one another. The environment around a strait seems complex because
there are many different elements, interactions, and relationships that
could be considered. It is useful to separate the environment purely for
the purpose of analysis into physical and human-built elements.
16
J. Freeman, Strait up, Boston Globe, March 20, 2009, (http://www.boston.com/
bostonglobe/ideas/articles/2009/03/29/strait_up/).
10
chapter one
Figure 2 is a 3D perspective view of the most important elements

of the physical and human-built environment of the Panama Canal.
The features of the channel and locks of the Panama Canal itself are
numbered from 1 to 9 including: 1) the Atlantic Ocean entranceexit channel, 2) the port of Cristobal, 3) Gatun Locks, 4) the channel
through Gatun Lake, 5) the area of the Culebra or Gaillard Cut at the
continental divide, 6) Pedro Miguel Locks, 7) Miraflores Locks,
8) the port of La Boca, and 9) the Pacific Ocean entrance-exit channel.
The navigable distance between the Atlantic entrance-exit channel
(1) and the Pacific entrance-exit channel (9) is approximately 51 miles.
Ancillary elements are i) Gatun Dam, creating Gatun Lake and the
canals primary source of freshwater, ii) Madden Dam, creating Madden Lake and another source of freshwater, iii) the contemporary route
of the Panama Railroad, and iv) Miraflores Lake. The location of the
port city of Coln is labeled as A, and Panama City as B (urban areas
are not shown). Also illustrated are roads, buildings, and other parts
of the human-built environment of the former Canal Zone.17
1.1 Elements of the Physical Environment
The elements of a straits physical environment include anything that
exists from the upper reaches of the Earths atmosphere to below the
Earths surface inhabiting or impacting a narrow water passage between
the seas. Mapping how physical environments converge in and around
a strait and create unique circumstances affecting international navigation can mean recognizing a variety of spatial and temporal scales.
For instance, long term patterns of ocean circulation can affect local
rainfall in the Gatun Lake watershed and thus the Panama Canals
water supply. In 1904, American engineers planned major modifications for the surrounding watershed so that it would be capable of
sustaining a continuous source of freshwater for canal operations.
Historically, since 1914, rainfall during the rainy season has always
provided adequate freshwater for operations during the ensuing dry
season. However, in extremely dry seasons such as the El Nio event
from 1982 to 1983 and from 1997 to 1998, freshwater levels in Gatun
Lake were so low that the Panama Canal Commission had to restrict
the maximum allowable draft of vessels for several months.18 Thus
17
18
Data sources compiled from various publicly available GIS data.

Autoridad del Canal de Panam (2006).
2. The physical and human-built environment of the contemporary Panama Canal
introduction
11
12
chapter one
there is a relationship between patterns in global ocean circulation

patterns, the need for greater water efficiency in canal operations, and
large-scale environmental modifications to impound a greater supply
of freshwater runoff.
1.2 Elements of the Human-Built Environment
Elements of human-built environments can be distinguished and
mapped in great detail from the scale of backyards to entire territorial
boundaries. Though we can try to separate elements of the physical and
human-built environment they function as a single environment. For
instance, the Panama Canal is a highly engineered environment but on
closer examination it functions by design as two artificially enhanced
rivers. The strategy ultimately employed by United States engineers
in 1906 was not to modify the physical environment in order to meet
expectations of a sea-level canal but rather take what the existing physical environment provided them. French engineers had contemplated
similar circumstances when pressed by a lack of time and resources,
but American engineers from the start essentially recognized that what
would work best was to simply use the natural courses of two rivers
that drained in opposite directions towards the Atlantic and Pacific
oceans, replace them with a system of freshwater canals and locks,
and then connect them together by excavating through the continental
divide separating them.
2. Flows Through the Environment
Flows through an environment are generally regarded in system
dynamics as the movement or the circulation of stocks between
sources and sinks. Most of the stock of goods, people, finances, and
messages that flow in transit through a straits environment do so in
order to generate commercial wealth elsewhere. However, there are
local commercial activities associated with flows in transit through a
straits environment that also generate wealth. For instance, the Panama Canal Authority identified direct, indirect, induced, and parallel
commercial activities in Panama related to the operational success of
the Panama Canal. As a whole, these related activities were estimated
to account for one third of the Republic of Panamas gross domestic
product and employ one quarter of its workforce.
introduction
13
2.1 Flows of Goods, People, Finances, and Messages in Transit

We can think of flows of stocks of goods, people, finances, and messages as a continuous process of movement on a mode of conveyance
like an oceangoing vessel, packaged and stored so as to be easy to
load and offload from one mode of transportation to another. Flows
of goods, people, finances, and messages can also be thought of as the
result of a discrete process of global communications and logistics to
generate commercial wealth. The significance of flows of goods, people,
finances, and messages is profound when considered in historical perspective. Entire societies evolve and sustain themselves on economic
activities associated with long-distance maritime flows.
2.2 Direct, Indirect, Induced, and Parallel Activities Associated with
Flows
Wealth to the Panamanian economy comes from several economic
activities associated with the operations of the Panama Canal. Direct
activities associated with canal operations include employee wages,
payments to the National Treasury, and local purchases. Indirect
activities and services include provisioning vessels in transit, shipping offices, fuel bunkering services, vessel repair and maintenance
services, launch services, dredging, pilots, and other services provided
to a ships crew and passengers. Induced commercial activities include
those that occur in the Coln Free Trade Zone, as well as most of
the activities in the ports, tourism operators, logistics, use of the railroad and other intermodal services, export processing, maintenance
of containers, and ground transportation. Finally, parallel activities
due to the relative geographic location of the Isthmus of Panama and
Panamas monetary system, which is based on the U.S. dollar, include
shipping services, flags of convenience, banking, finance, insurance,
legal services, airports, merchant marine, telecommunications, maritime courts, and other related services.
3. Territoriality Over the Environment
Sovereign states can impose their territoriality over a straits environment and everything that flows or passes through it, including related
commercial activities. In animals, territoriality is simply a pattern of
behavior related to the occupation and defense of a territory. In refined
human understanding, the territoriality principle provides the basis
of legal authority for a state to exercise its jurisdiction over something
14
chapter one
like a crime, based on the fact that the crime occurred within its territorial borders. The territoriality principle may also bar a state from
exercising jurisdiction beyond its territorial borders though not without
with some exceptions. Territoriality is a very broad term which in this
book is not limited to mean just the jurisdiction of a sovereign state.
The broad definition of territoriality used in this book is the following:
an attempt by an individual or group to affect or influence elements
in the physical and human-built environment including people and
phenomena or their interactions and relationships by delimiting
and asserting control over a geographic area recognized as territory.19
Territoriality over a straits environment and everything that passes
through it is not limited to high matters of foreign relations. It also
includes day-to-day things like enforcing rules, procedures, and regulations over Panama Canal piloting; safety procedures when maneuvering vessels into place before entering the locks of the Panama Canal;
or employment guidelines with respect to how American citizens were
to be paid as Canal Zone employees in comparison with rates of pay
of American government employees doing comparable work back in
the United States.
3.1 Territoriality by Adjacent Sovereign States
Everything that happens in or moves through a strait is subject to the
sovereign privileges, rights, and authority of the state or states within
whose territorial boundaries the narrow water passage lays, unless that
situation is altered through mutual agreement. The adjacent states
territorial boundaries are displayed by imposing structural features as
part of the built environment such as gates, fences, or buoys, usually
through a negotiated process of demarcation with other adjacent states.
An interesting fact, of course, is that in the historical past threatening
displays of a states territoriality over adjacent seas were limited by the
three-nautical-mile distance that any given onshore battery of cannon
could fire. The convention of this threatening display of territoriality
evolved into the accepted three-nautical-mile boundary to represent a
states territorial seas, extended from the outermost accepted coastal
baseline points or island extensions.
19
Robert D. Sack, Human territoriality: Its theory and history (Cambridge: Cambridge University Press, 1986).
introduction
15
Territoriality over a straits environment and everything that flows

through it can occur by means of official executive orders, or by means
of emergent group activities whereby people assert some sort of symbolic control over territory, even if they do not carry any official title
or endorsement from a government. This latter aspect of territoriality
allows for consideration of more than just government representatives
at the diplomatic negotiating table. Territoriality describes groups of
people acting for the welfare or defense of perceived social interests
in contest with internal rivals and opposition, for example, during the
student-led demonstrations during the 1960s involving planting the
Panamanian flag in the Canal Zone.
3.2 (Extra)territoriality by Non-Adjacent Sovereign States
Narrow water passages between adjacent land areas connecting the high
seas have historically been the objects of geopolitical maneuvering and
extraterritoriality by powerful non-adjacent states whose citizens rely
on use of straits in foreign territory to sustain flows of goods, people,
finances, and messages vital to the states general welfare and common
defense. Among Baxter and Triskas five types of territoriality over interoceanic canals, the only instance of operation by a foreign sovereign was
the Panama Canal, a result of the 1903 Hay-Bunau-Varilla Treaty.
But when exactly might one say the circumstances of territoriality
changed from operation by a foreign sovereign to operation by the territorial sovereign in the case of the Panama Canal? December 31, 1999
at midnight was the official date when administration and operations
were to be turned over the Panama Canal Authority under the Republic of Panama. However, the Panama Canal Commission (19791999)
was a joint United States and Panama administering body, a result of a
major reorganization of the Panama Canal Company and Canal Zone
Government (19511979) through the terms of the 1977 Panama Canal
treaties. In addition, there were notable reorganizations and more than
one partial abrogation of the extraterritorial rights acquired by the United
States under the 1903 treaty, beginning with the 1904 Taft Agreement.
C. Conclusion
With the exception of a framework in Baxter and Triska there is no
framework for detailed historical comparison between the Panama
Canal as an artificial strait and other straits. The book is motivated
16
chapter one
to investigate the Panama Canal as an artificial strait in comparison

with other natural or artificially-enhanced straits with respect to its
environment, flows, and territoriality.
Part I will describe the environment of the Isthmus of Panama by
selecting three major changes to its physical and human-built environment, from physiographic processes occurring 16 million years ago
that uplifted a natural strait to create the Isthmus of Panama land
bridge, to the activities of the Isthmian Canal Commission after 1904
to create an artificial strait, and finally, to the activities of the Panama
Canal Authority between 2005 and 2014 to add a larger third set of
locks and deepen the interior navigation channels.
Part II will describe interoceanic flows that passed in transit through
Panamas human and built environment following three major periods of technological enhancement, including the Royal Road and Las
Cruces Trail (15401740), the Panama Railroad (18521869), and the
Panama Canal (1914-date). Part II will show that the Panama Canal
environment has contributed to the phenomenon of globalization by
conveying flows of goods, people, finances, and messages since the
16th century. Part II is a concise statistical review about how three
different built environments functioned in very different ways with
respect to their viability over time and peak periods of operation, the
points of origin and destination they served, and whether they specialized in serving flows of goods, passengers, finance, or messages.
Finally, Part III will describe territoriality over both the physical
and human-built environments of the Isthmus of Panama and the
interoceanic flows through that environment. The Panama Canal is
the only artificial strait that for most of its 100 years of operating history was owned and operated by a foreign sovereign nation. Thus the
issue of territoriality bears explanation. Part III explains territoriality over the Panama Canal as an interaction between the territoriality
of two Panamanian societies and the territoriality of two alternating
American policy regimes. Part III is not a complete history of foreign
relations between the United States and the Republic of Panama but
one that transcends, and explains, persistent motivations between and
among different American and Panamanian demonstrations of territoriality over the Panama Canal and former Canal Zone.
PART ONE
THE ENVIRONMENT OF A STRAIT
CHAPTER TWO
THE ENVIRONMENT OF THE ISTHMUS OF PANAMA

A. Introduction
In 1901, the Isthmian Canal Commission published as part of its
recommendations to Congress a map of all practicable routes investigated in the past for an interoceanic canal. The map was entitled
The American Isthmus from Tehuantepec to Buenaventura Showing
Routes Investigated for a Ship Canal. The map was very simple and
depicted 19 routes including all those investigated by the Commission as well as those investigated in the past in more than a dozen
other surveys and maps.1 The 19 routes include 1) Tehuantepec Route;
2) Fonseca, 3) Realejo, 4) Tamarindo, 5) Brito, 6) S. Juan del Sur, and
7) Salinas Bay; 8) Panama Route, 9) San Blas Route, 10) Caledonia Bay
Routes, 11) Tupisa-Tiati-Acanti Route, 12) Arguia-Paya-Tuyra Route,
13) Atrato Cacarica Tuyra Route, 14) Atrato Peranchita Tuyra Route,
15) Atrato Truando Route, 16) Atrato Napipi Route, 17) Atrato Bojaya
Route, 18) Atrato Baudo Route, and 19) Atrato San Juan Route.
The Isthmian Canal Commission selected routes 2 through 7 (Nicaragua) and route 8 (Panama) for final evaluation and recommendation
to Congress and the President. Route 8 across Panama was considered
to have a number of physical advantages, including a much shorter
and straighter route, more complete survey knowledge of surface and
subsurface features, and lower expected costs of maintenance and
operation. However, the Commission felt that the costs to acquire the
New French Panama Canal Company at the time of publication in
1901 were so unreasonable that routes 2 through 7 across Nicaragua
provided the most practicable and feasible potential route for a canal
under American control.
The fact that routes 2 through 7 and route 8 were selected for final
consideration was not surprising. Paleogeographic reconstructions of
the Central American isthmus twenty million years ago depict two
1
U.S. Congress, Senate, Report of the Isthmian Canal Commission, 18991901, 57th
Cong., 1st Sess., Doc. No. 54 (Washington, D.C.: GPO, 1901).
20
chapter two
major seaways between the Atlantic and Pacific Oceans. One seaway
was oriented east-west across Nicaragua and another oriented northsouth across Panama. Based on physical evidence and model inferences it is likely that the geologic legacy of the ancient Nicaraguan
seaways led to the contemporary features of Lake Nicaragua and the
Rio San Juan, routes 2 through 7 in the Isthmian Canal Commissions
1901 map. It is also reasonable speculation that the geologic legacy
of the ancient Panamanian seaway led to the Chagres River and Rio
Grande Rivers, route 8 in the Isthmian Canal Commissions 1901 map.
The physical environments of the Chagres River and Rio Grande Rivers in Panama were modified to create the original Panama Canal that
opened in 1914 as an artificially-enhanced version of the natural strait
that existed until only a few million years ago.2
B. How a Strait Became an Isthmus 16 Million Years Ago
Many narrow and natural sea passages joining the high seas played
the opposite role in the ancient past, since by definition an isthmus
is the exact opposite of a strait. There are straits existing today that
used to be isthmuses, joining continents and enabling massive biogeographic exchanges overland. There are also isthmuses existing today
that used to be straits, joining oceans and enabling massive physical
and biogeographic exchanges by sea, and Panama was one of them.3
Though offered with some caution based on the inferential methods
used for paleogeographic reconstruction, geologists have speculated
that twenty million years ago during the Miocene epoch the Jutland
Peninsula (Denmark, Germany, and site of the Kiel Canal) did not
obstruct passage between the Baltic and the Atlantic, both the Strait
of Gibraltar and the Strait of Malacca were not straits at all but were
land bridges and barriers to interoceanic exchange, the Mediterranean
Sea was twice as long and continued east as an enormous inland sea
across the Arabian Peninsula all the way to the Persian Gulf and the
2
Ron Blakey, Regional paleogeographic views of earth history, 2009, (http://jan.
ucc.nau.edu/~rcb7/globaltext2.html). Blakey (2009) depicts Nicaragua and central
Panama as the two deepest and widest seaways. See also Frank C. Whitmore Jr. and
Robert H. Stewart, Miocene mammals and Central American seaways, Science 148
no. 3667 (1965): 180185.
3
See, for instance, Lapidoth-Eschelbacher (1982) for speculation about the Red Sea.
the environment of the isthmus of panama
21
Indian Ocean, and the Red Sea was so narrow that it was practically
closed off.4
In addition, there were deep and very wide natural straits and
seaways through Central America from just south of the Isthmus of
Tehuantepec in Mexico to the Darien Province of Panama on the Panamanian-Colombian border. There have been some scientific doubts
based on fossil evidence that a major seaway across the Isthmus of
Tehuantepec in Mexico ever existed during the later Tertiary period
(65 million to 2.588 million years ago). Yet there is no doubt from
either fossil evidence or paleogeographic reconstructions that for millions of years there were enormous seaways between the Atlantic and
Pacific Oceans through Central America, dotted with volcanic islands
and subject to intense tectonic activity.5
It was about sixteen million years ago during the late Miocene and
early Pliocene epochs that gradual and fragmented geological processes of upwelling began to constrict and shallow out the seaways
and natural straits across Nicaragua and eventually Panama, which
was subducted by the Pacific Ocean Cocos plate. The Isthmus of Panama itself was formed from Central American crustal blocks of the
Atlantic Ocean Caribbean plate that became fused together at what is
referred to as the Gatun fracture zone, an area that by all indications
lies precisely along the former Chagres River valley and route of the
Panama Canal.6
According to one scenario, as the crustal blocks of the Isthmus of
Panama became subducted by the Cocos plate, the Panama straits
gradually began to shallow to a depth of 150 meters between twelve
and seven million years ago, and then to less than 50 meters between
six and four million years ago.7 Incidentally, the Panama Canal
Authoritys plans call for dimensions of the Third Set of Locks to
be 18.3 meters (60 feet) in depth. Fossil evidence from widely and
See methods used by Blakey (2009).

See also Jay M. Savage and Marvalee H. Wake, Reevaluation of the status of taxa
of Central American caecilians (Amphibia: Gymnophiona), with comments on their
origin and evolution, Copeia 1 (2001): 5264. Savage and Wake (2001) suggested
seaways dotted with volcanic islands.
6
The Gatun fracture zone in the map provided by Savage and Wake (2001) seems
to lie along the line of the Panama Canal itself.
7
See Harry L. Fierstine. Makaira sp., Cf. M. Nigricans Lacpde, 1802 (Teleostei:
Perciformes: Istiophoridae) from the Late Miocene, Panama, and Its Probable Use of
the Panama Seaway, Journal of Vertebrate Paleontology 19 no. 3 (1999): 430437.
5
22
chapter two
rapidly dispersed marine larva like tonnoidean gastropods (marine

snails) indicates that the Central American seaways began to constrict
by the early middle Miocene epoch sixteen to fourteen million years
ago.8 Intermittent larval transport between the Atlantic and Pacific
Oceans continued during the late and early Pliocene epoch and the
early Pleistocene epoch two and one-half to five million years ago.
Larval transport may have continued as late as two-and-one-half million years ago in the early Pleistocene epoch during interglacial periods of high sea-level when shallow and constricted seaways inundated
the land, but discontinued during glacial periods of low sea-level when
the land bridge reemerged.9
The Pacific Ocean Cocos plate uplifting process that created the
Isthmus of Panama about three million years ago recreated an ancient
continental land bridge and removed barriers to overland movement,
and with it the long isolation that had existed between North and South
American biota. The result was a massive biogeographic exchange
between the two continents called the Great American Interchange.10
The movement of terrestrial mammals over the Panama land bridge
between North and South America is one of the most well studied
phenomena in biogeography. The uplift of a land barrier also had significant effects on the distribution and abundance of marine life, in
effect, cutting off oceanic circulations and exchanges of marine flora
and fauna between the Atlantic and Pacific Oceans. In fact, the massive reorganization in patterns of Pacific and Atlantic oceanic circulation caused by the uplifting of the Isthmus of Panama represented
one of the causes of global climate change and glaciation during the
Pleistocene epoch.11
The early Pleistocene epoch two-and-one-half million years ago is
the most recent period that scientists suggest there were shallow and
Alan G. Beu, Gradual Miocene to Pleistocene uplift of the Central American

Isthmus: Evidence from tropical American tonnoidean gastropods, Journal of Paleontology 75 no. 3 (2001): 706720. Brian N. White, The isthmian link, antitropicality and American biogeography: Distributional history of the atherinopsinae (pisces:
atherinidae) Systematic Zoology 35 no. 2 (1986): 176194.
9
Fierstine (1999) discusses the use of the Panama seaways by large vertebrates and
cites evidence that the Isthmus of Panama is believed to have completely emerged by
3.5 million years ago.
10
Larry G. Marshall, S. David Webb, J. John Sepkoski, and David M. Raup, Mammalian evolution and the Great American Interchange, Science 215 no. 4538 (1982):
13511357.
11
See Beu (2001).
23
narrow seaways across the Isthmus of Panama. The Pleistocene is significant because it was during the late Pleistocene epoch about 150,000
years ago when modern human beings began emigrating out of the
African continent to Europe and Asia, crossing the Bering Sea ice
bridge to North America and eventually across the Isthmus of Panama
to South America. Evidence from sources like fossil pollen, phytoliths,
diatoms, sediment chemistry, pigment-analysis, and clay mineralogy
suggests that the landward spread of human beings out of the African
continent had reached the Isthmus of Panama by about 11,000 years
ago, although well-preserved archaeological finds of stone tools and
weapons typically tend to date human occupation of Panama to earlier
periods. Evidence of fires in the sedimentary record, which scientists
say could not have been of natural origin, characterize the first human
occupation of Panama as local and patchy clearing of forest trees. Pollen and other evidence of cultivated maize agriculture appear in Panamanian sedimentary evidence as early as 7,000 years ago. There is also
some evidence that the Isthmus of Panama was used for interoceanic
exchanges between pre-Colombian Panamanian civilizations.12
The most recent massive biogeographic exchange of people, flora,
and fauna, termed the Colombian Exchange, was not a gradual overland migration via natural ice or land bridges but a dramatic interaction between the Americas and Europe and Africa via oceangoing
vessels. Europeans and Africans introduced an essentially Mediterranean agro-ecological system of flora and fauna adapted from the dry
coasts and uplands of the Mediterranean coast on the Iberian Peninsula. Europeans also introduced their advanced military equipment,
cultural and religious conventions, and most significantly, contagious
diseases to which people in North and South America had never been
exposed. In the most recent strata of sedimentary evidence from Panama, scientists note a marked period of forest growth over the last
several centuries and infer that massive human population losses led
to a precipitous decline in agriculture and forest-clearing activity.13
Inferential evidence of massive population loss on the Isthmus of
12
Christopher C. Ward, Imperial Panama: Commerce and conflict in isthmian
America, 15501800 (Albuquerque: University of New Mexico Press, 1993).
13
Mark B. Bush, Dolores R. Piperno, Paul A. Colinvaux, Paulo E. De Oliveira,
Lawrence A. Krissek, Michael C. Miller, and William E. Rowe, A 14 300-Yr paleoecological profile of a lowland tropical lake in Panama, Ecological Monographs 62 no.
2 (1992): 251275.
24
chapter two
Panama adds insight to what is already known from historical records

about the impact of human disease on relatively isolated North and
South American civilizations as a result of the maritime biogeographic
exchange between the American continents and Europe and Africa at
the turn of the 16th century.14
What European explorers at the turn of the 16th century had been
intent on discovering was an alternate maritime means of long-distance interoceanic exchange between the Mediterranean and Atlantic
Oceans, and the Indian and Pacific Oceans, that is, an alternative to
a transcontinental overland route through the Middle East or a sea
voyage around the continent of Africa. The first Europeans did not
find a natural strait through the Western Hemisphere to Asia because
it had disappeared more than three million years ago; but what they
did find was whatever was left of it as a passage through the Isthmus of Panama via the Chagres River watershed. The first group of
Europeans to explore the coast of the Isthmus of Panama presumably
arrived sometime in 1501 led by Rodrigo de Bastidas, who left the port
of Cadiz in Spain in October 1500 with two ships as the last of five
expeditions allowed as private voyages, licensed by Spain, in the wake
of Christopher Columbus first voyage. Bastidas may have explored the
Atlantic coast of Panama as far west as the eventual sites of Nombre de
Dios and Porto Belo near the contemporary Atlantic Ocean entrance
point of the Panama Canal.15
The first documented European transit across the Isthmus of Panama was in September 1513 by a combined force of about two hundred
Europeans and a thousand South American natives who made their
way to the Pacific Ocean led by the Vasco Nuez de Balboa, appointed
by King Charles I as one of the early Governors of Darien, and one of
the former members of Bastidas original exploration of the Atlantic
coast of Panama in 1501. Unbeknownst to either Vasco Nuez de Balboa in 1513 or the Isthmian Canal Commission four centuries later in
1901 was the fact that the geologic legacy of ancient Nicaraguan and
Panamanian seaways had already provided human enterprise with the
physical environment for an artificial strait.
14
Richard N. Adams, The conquest tradition of Mesoamerica, Americas 46 no. 2
(1989): 119136. Adams conquest tradition is very much in the spirit of a territorialadministrative society of the interior and the longue dure.
15
Ira E. Bennett, History of the Panama Canal. Builders Edition (Washington,
D.C.: Historical Publishing Company, 1915).
25
C. How an Isthmus Became an Artificial Strait

One Hundred Years Ago
During their first field visit to Panama on 5 April 1904, the Isthmian
Canal Commission (the Commission) itemized six problems about
the physical and human-built environment that they would have to
solve in order to build the Panama Canal. The six problems included
1) harbor improvements and seawater entrance channels, 2) flooding
in the Chagres River watershed, 3) excavating an interior freshwater
navigation channel at a summit level as yet to be determined through
the continental divide, 4) constructing locks, 5) civil infrastructure
ensuring public health and public safety within the boundaries of the
Canal Zone; and finally 6) civil infrastructure ensuring public health
and public safety in the maritime port cities adjacent to the Canal Zone.
With the exception of partial excavation of interior freshwater navigation channels and harbor improvements, none of the six environmental problems had been solved by French private enterprise between
1880 and 1904, according to the Isthmian Canal Commission.
1. The Human-Built Environment in the Canal Zone and the
Adjacent Maritime Port Cities
The plan for the human-built environment within and adjacent to the
boundaries of the Canal Zone buffer was the Isthmian Canal Commissions first priority. Congress and President Theodore Roosevelt
created a Canal Zone government to govern its workforce. Legislative
powers were given to the Isthmian Canal Commission, judicial powers
to a Canal Zone court system, and executive powers to a Canal Zone
Governor. Among the first priorities as instructed by Roosevelt were
reducing risks to public health and public safety. Roosevelt remarked
that the United States had already successfully dealt with diseases such
as yellow fever during occupation of Cuba and Puerto Rico after the
1898 Spanish-American War. Roosevelt said he expected health conditions to improve in Panama as least as much as they had in Cuba and
Puerto Rico.
In 1905, after a year of progress that Roosevelt criticized as unsatisfactory, the Commission said it was useless to hope for productive
results from the canal workforce in terms of modifying the physical
environment until the human-built environment was significantly
improved. The Commission, therefore, decided to stop large scale
26
chapter two
excavation in what it called a radical change of policy. The Commission said:

The Isthmus must be made healthy by thorough sanitation, proper quarters and food must be provided for employees, and adequate terminal
facilities must be constructed for the prompt and economic handling of
supplies and material. It was decided, therefore, to stop at once excavation on a large scale until the preparatory work was done. The Commission realized that this was a radical change of policy, but believed that
it would be approved when a full statement should be made of existing
conditions and of the difficulties to be overcome before canal construction could be undertaken in accordance with a comprehensive and systematic plan.16
Modifying the human-built environment meant bringing in supplies,

engineers, and manual laborers to construct new roads, railways,
bridges, houses and offices, sewer systems, water systems, power systems, and other support facilities. Changes were intended not only for
the canal workforce and the residents of municipalities in the Canal
Zone, but for the Panamanian population of the adjacent maritime
port cities of Coln and Panama City.17 Accommodating and governing the human elements of the human-built environment in terms
of the health and safety of people living in or near the Canal Zone
was the responsibility of the Governor. The Governors staff included
five executive departments that administered health, revenues, justice,
police, and education. At the time of its creation in 1904, the health
department had five separate services including a sanitary service, hospital service, maritime-quarantine service, health officer for the city of
Panama, and health officer for the city of Coln.
The health department was aggressive about responding to reports
of disease, isolating patients and preemptively eradicating known
disease vectors. One of the first public health issues confronted by
the Isthmian Canal Commission and the Governor was the perception of exotic tropical diseases against which there was no remedy.
For example, according to the health departments statistics, between
1 May and 31 August 1905 most deaths were due to malaria (85 deaths)
whereas there were about half as many fatal cases of yellow fever (47
deaths). Yet diseases caused by parasitic animals and bacteria other
than those carried by mosquitoes caused more fatalities than malaria
16
17
Isthmian Canal Commission, Annual Report (Washington, D.C.: GPO, 1905), 6.

Isthmian Canal Commission, Annual Report (Washington, D.C.: GPO, 1904).
27
and yellow fever combined, including diarrhea and enteritis (57

deaths), consumption, i.e., tuberculosis (54 deaths), pneumonia (49
deaths), and dysentery (46 deaths). The range of fatalities from nonmosquito carried diseases suggests that a combination of overcrowding in urban areas, lack of adequate water and sewage systems, and
maybe also malnutrition represented the major underlying threat to
public health. The perception of contracting yellow fever, according to
the Isthmian Canal Commission, was out of proportion to its actual
impact on canal laborers given all the other sorts of human health
problems. Nonetheless, taking steps to eradicate breeding areas for the
different species of mosquito that carried the yellow fever virus or the
malaria parasite, and advertising the elimination of all cases of yellow
fever, would help the Commission to attract and maintain its resident
immigrant workforce.
The Isthmian Canal Commissions activities to accommodate the
human elements of the human-built environment, laudable in many
respects for their positive outcomes on quality of life, had a strictly
instrumental purpose. The Commission itself stated that ensuring
public order and the safety and health of the workforce, including
measures like subsidizing delivery and sale of more highly nutritious
sources of fresh foods in refrigerated rail cars and providing employees
of all levels with much better accommodations, was a policy designed
to increase productivity and decrease high labor turnover. The first
Chief Engineer John F. Wallace (19041905), a former railroad engineer and railroad company manager, recommended supplying food to
the canal workface with the same methods and practices used to supply boarding camps, restaurants, and hotels for the transcontinental
railroads.18
The second Chief Engineer John F. Stevens (19051907) was critical
of labor when he arrived. Stevens evaluated manual labor in the Canal
Zone against common labor in the United States and complained
that the Panama Canal workforce was expensive by comparison. Stevens said that even after proper allowance for differences in wages,
he doubted if the efficiency of labor in Panama rated any higher than
33 per cent of similar labor in the United States. Stevens believed that
labor efficiency had to be improved and it could be done by recruiting larger numbers of people, using prompter methods of payment,
18
See the Isthmian Canal Commission Annual Report (1905, 344).
28
chapter two
subsidizing more nutritious well-cooked foods, and more carefully

selecting foreman and superintendents.
The human element of the human-built environment problem
was not limited to accommodating and governing the workforce
already living in or near the Canal Zone. It also included attracting
and recruiting employees from the United States, the Caribbean, and
Europe. It is understandable, from the point of view of the beginning
of the 21st century, to be startled by the prejudicial narrative that occasionally punctuates the Isthmian Canal Commission annual reports at
the turn of the century. For instance, the Commissions 1904 report
asserts that manual excavation was not a suitable job for the Caucasian
race due to the tropical environment, requiring some means to attract
other sources of immigrant labor. Eventually, the labor force for the
construction of the Panama Canal grew to a professional workforce of
about five thousand people from the United States, and a manual labor
force of nearly forty thousand recruited from the Caribbean including Barbados, Martinique, Guadeloupe, and Trinidad. There were also
large numbers of people who came to Panama from the Mediterranean, particularly from Spain but also from Italy and Greece.
Recruiting qualified professionals and their families from the United
States to come to Panama was equally as problematic as recruiting
manual laborers from the Caribbean and other places. At the beginning in 1904, the Isthmian Canal Commission was worried that market forces alone, e.g., wages, were not sufficient to attract a manual
labor force in large enough numbers. Various non-market methods
were used to attract labor from the United States though there were
repeated calls to put the Canal Zone under a special legal regime so
that restrictive labor laws that applied in the United States could be
circumvented. Non-market practices used to recruit labor from the
Caribbean included things like providing quota payments to foreign
government officials. Labor recruitment and high turnover was such
a serious problem that the second Chief Engineer John F. Stevens
even tried to negotiate immigration of Chinese labor into Panama,
as had been done to construct the transcontinental railroads across
the United States. Like Wallace before him, Stevens had a wide range
of transcontinental railroad experience and had worked as a famous
locating engineer for the 1893 Great Northern Railway before being
hired by President Roosevelt for the Panama Canal.
Cost estimates made public by Ferdinand De Lesseps, speaking as a
representative of La Compagnie Universelle du Canal Interoceanique,
29
often refer to what the company expected to spend on excavation and

engineering operations to modify the physical environment. None of
the costs of modifying a human-built environment figure as highly. It
would be a revealing historical comparison to investigate the time and
resources spent modifying the human-built environment in Panama
for the professional and manual labor workforce of the Panama Railroad Company after 1851, the original French Panama Canal Company (La Compagnie Universelle du Canal Interoceanique) after 1880,
the reorganized New French Panama Canal Company after 1894, and
finally, the United States federal government after 1904. Such a comparison would be even more helpful if it also included expenditures of
time and resources by railroad companies to sustain and supply the
mobile civil societies of professional and manual laborers that constructed the American transcontinental railroads during the second
half of the 19th century.
Putting expenditures into comparable categories across organizations, converting currencies, and adjusting for inflation are well
outside the scope and purpose of this book. Nonetheless, similar patterns of expenditure might be expected when comparing two private
companies, but profoundly different patterns of expenditure might be
expected when comparing a private company with the United States
federal government. The results of such an analysis might shed light
on the policy of the Isthmian Canal Commission to spend money
modifying the human-built environment as its first task, in order to
then recruit, accommodate, and govern the labor force necessary to
modify the physical environment.
Modifying the human-built environment was a priority and much
of the work was accomplished in the first few years under the tenure of figures whose histories have already been investigated in depth,
including the first Governor Maj. Gen. George W. Davis, the chief
sanitary officer William C. Gorgas, the second Chief Engineer John
F. Stevens, and the third Chief Engineer and Governor Maj. George
Washington Goethals. For modifying the physical environment, the
Isthmian Canal Commission faced a Janus-faced undertaking. In the
center was an initially dry excavation project through the continental
divide in the area of the Culebra Cut that needed a plan for an efficient
railroad system to carry away massive amounts of excavated material.
On either side of the continental divide were parallel projects to excavate freshwater navigation channels. One channel connected to the
Atlantic along the course of the Chagres River and another connected
30
chapter two
to the Pacific along the course of the Rio Grande. There were also parallel projects for locks and parallel projects for harbors and entrance
channels, one at the Atlantic end adjacent to Coln and the other at
the Pacific end adjacent to Panama City. The Janus-faced geographic
division of labor for the Panama Canal was eventually formalized by
the third Chief Engineer Maj. George Washington Goethals, who created three construction divisions to finish construction of the Panama
Canal including the Atlantic division, the Pacific division, and the
Central division.
The Isthmian Canal Commission in 1904 had to consider whether
they should start by duplicating effort on the Atlantic and Pacific sides
simultaneously or work in a certain sequence, starting on one side first
and then gradually moving operations to the other side. Thus the Isthmian Canal Commission outlined an itemized plan of projects, and
most importantly, described a sequence of work to accomplish them
that later Chief Engineers like Goethals would execute.
2. A Sea-Level Canal or a Canal With Locks
In brief, initial plans for modifying the physical environment of the
Isthmian Canal Commission were as follows. The plan for the problem
of harbor improvements at both Atlantic and Pacific ends of the canal
was to construct breakwaters and dredge seawater entrance channels.
The plan for the problem of how to handle uncontrolled runoff from
the Chagres River watershed was to construct dams and other massive
water control means. The summit level for the freshwater navigation
channels was yet to be determined. The plan for the problem of the
type, dimensions, and number of locks would depend upon the choice
of summit level. Figure 3 illustrates the location of the canal proposed
by the Isthmian Canal Commission in 1901.19 The darker grey area in
the side-view transect figure shows the excavation already completed
by the French canal companies. The lighter grey area represented the
excavation that had yet to be completed for the proposed canal with
locks. Figure 3 also shows that the line of the canal followed the Chagres (and Obispo) River, which still existed at the time of the making
of the map, and the Rio Grande on the Pacific side. Constructing the
19
Source of map is U.S. Congress, Senate, Report of the Isthmian Canal Commission, 18991901 (1901).
3. The physical environment of Panama in 1901 before American construction

31
32
chapter two
locks themselves after they had been sited involved forming cement
lock chambers, devising a gravity-powered water control system,
installing massive iron lock gates that could be removed and repaired,
and installing supporting mechanical and power systems.
The Commission planned to begin work for a harbor on the Atlantic
side to supply all of their operations, after which they would excavate
in the central Culebra Cut area and also move to the Pacific side to
conduct several projects simultaneously to those on the Atlantic side.
However, the one preemptive decision that had to be made as early as
possible was whether to plan for a sea-level canal or a canal with locks.
The difference between a sea-level and a lock canal was one of degree,
determined by the relationship between an organizations time and
resources, expectations about future demands on canal capacity, and
the environmental circumstances that had to be modified. Ultimately,
the Commissions plan focused on taking advantage of the physiographic circumstances of the Isthmus of Panama by simply modifying how water naturally flowed through existing drainage basins. The
Commission basically used natural river courses to build an artificial
Atlantic-draining river that connected to an artificial Pacific-draining
river through the continental divide, impounding a large artificial
freshwater lake in the middle for the water supply. Through human
engineering, the Commission took the natural advantages belonging
to the Panama route, in terms of a shorter route with less curvature,
and recreated the natural advantages that had belonged to the environment of Nicaragua by creating an artificial Gatun Lake that mimicked the enormous freshwater resources of natural Lake Nicaragua at
the summit.
The initial determination of the Isthmian Canal Commission during
its first field visit in April 1904 was undetermined as to what the summit of the Panama Canal would be. However, to this author they were
clearly skeptical of the feasibility of a sea-level canal at the beginning,
at least under the time and resource constraints imposed by Congress
and the President. Caveats about available time and resources are
repeated almost every time any mention is made of a sea-level canal,
and it is not surprising that frequent mention is made of the shortfalls
of the initial French sea-level plan, not on account of its design but
rather its application. In other words, the design was suitable for the
circumstances presented by the physical environment of Panama, but
not for the management circumstances the French company should
have operated within, but did not.
33
For instance, the Commissioners noted that the only excavation

work still being done by the French company was at the Culebra
Cut, involving a few French steam excavators and dump trains with
a workforce of about seven hundred. The Commission suggested that
the French companys choice between a canal at sea-level or with locks
should have been determined by the time and resources available to
meet the terms of their contract. Meeting the terms of the companys
contract with Colombia should have dictated the French company
would choose a canal with locks, rather than a sea-level canal, so as
to avoid forfeiture of their franchise. A New York Times article on
22 December 1879 entitled De Lessepss Plea said that all faith and
hopes of the French Panama venture rested on the personal credibility
of Ferdinand De Lesseps, who had successfully led construction of the
Suez Canal, and that it was a question of a canal without locks or a
canal enterprise without De Lesseps. The Commission said:
But the radical difference is that the French canal was a commercial
enterprise based on a time concession. It must be completed at a cost
on which the traffic would yield a reasonable revenue, and within a limited time. Under these exigencies of resources and of time the original
intention of a sea-level canal was abandoned and successive reductions
made in the amount of excavation work until a lock canal, with a summit level of 110 feet above mean ocean tide, was seriously proposed, and
it was only on the reorganization of the enterprise, and an extension of
the time limit, that a return was made to a plan with a summit level of
61.5 feet.
The Isthmian Canal Commissions decision making was not influenced by their ability to raise funds from private investors, but it still
operated under time and money constraints imposed by Congress.
The Commission stated that among its objectives was determining the
practicability of a sea-level canal despite its greater costs. If a sea-level
canal seemed impractical under the constraints imposed by Congress,
and by many early indications it seemed that would be the case, the
Commission would have to decide upon an appropriate summit level
above sea level and then determine the depth of the channel and type,
dimensions, and locations of locks.
An interesting factor in the Commissions field investigations was
the importance given to the second derivative of lowering the summit
level, i.e., widening the slope of excavation. The Commission reported
that although the French companys investigations were valuable and
accurate, the information was not adequate for the Commissions
34
chapter two
plan for a much larger set of navigation channels. The Commission

decided that they would have to completely resurvey the topography
and subsurface features of the Isthmus. As a result of its subsurface
investigations, the Commission adjusted the planned slope of excavation on either side of the interior freshwater channels to match the
loose and unstable properties of the exposed subsurface, particularly
in the upper strata of the Culebra Cut area. If the sides of the channel
were to achieve the gentle slope necessary to reduce risk of instability, estimates of the amount of material that had to be excavated and
then hauled away by railroad or other means had to be significantly
increased.
The most relevant decision points would be a canal with a summit
approximating sea-level, a canal with one set of locks on both sides
and a summit level that was a bit higher, or a canal with two sets of
locks on both sides and a summit level that was yet even higher. The
basic problem the Commission faced was the uncertainty about exactly
how much greater or lesser the time and resources would be as a result
of raising or lowering the proposed summit level. The Isthmian Canal
Commission not only wanted to completely resurvey the area, they also
wanted to perform their own semi-controlled experimental testing to
estimate how much work certain people and equipment operating in
actual field conditions could perform and at what cost. However, simplifying assumptions about the relationship between time, resources,
and summit level objectives may have been based upon questionable
extrapolations from excavation trials under conditions that were not
representative.20
For instance, one (unadjusted for inflation) estimate by the 1905
Commission calculated that the extra cost of excavating a sea-level canal
instead of a lock canal with a summit level of 85 feet was $79,742,200.
By comparison, the extra cost of excavating a sea-level canal instead
of a lock canal with a summit level of 60 feet was only $52,462,000. In
a sense, leaving the extra 25 feet at the summit would save nearly $30
million (unadjusted for inflation) dollars, about 13 percent of the entire
cost of construction. The 1905 Commissions total estimated cost for
20
For an example of the problems of simplifying assumptions about relationships

between excavation, time and cost see Isthmian Canal Commission (1905) for the letter of O. H. Ernst, Colonel of Engineers, to T. P. Shonts, Chairman of Isthmian Canal
Commission on 1 August 1905.
35
a sea-level canal was $230,500,000, including $38,450,000 for administration, engineering, sanitation, and contingencies but not including
interest payments or any of the millions of dollars spent by the Canal
Zone government for modifying the human-built environment.
There was a trade-off between summit level on the one hand, and
time and resources on the other. There was also a tradeoff in terms of
expectations about future demands on canal capacity. It is not incredibly difficult to find speculation about the impact of locks on future
demands over canal capacity. However, it is difficult to find a determinative judgment on the matter. Perhaps the most determinative
judgment comes from the report of the board of consulting engineers,
published as part of the Isthmian Canal Commissions 1906 annual
report.
A higher summit level meant more locks, which reduced the costs
of excavation but also decreased the ability of the canal to meet future
demands. However, a lower summit level meant fewer locks, which
increased the costs of excavation but also increased the ability of the
canal to meet future demand. Part of the Commissions reasoning for
making the depth of the navigation channel at least 35 feet was its
expectation it would ensure many years of commerce and compared
well with the depths of the Suez Canal (<30 feet), Manchester Canal (26
feet), Kiel Canal (29.5 feet), North Sea Canal (32.89 feet), and entrance
channel to New York harbor (40 feet). Nonetheless, the Commission
understood that committing to a lock-canal would restrict commerce
at some point and would make transforming to a sea-level canal a
more difficult and costly process.
Like any high stakes decision making process with uncertainty and
a lack of complete consensus among technical experts, the Isthmian
Canal Commission, the President, and ultimately Congress made a
choice based upon the consequences of being wrong. It was better to
bear the negative consequences of constructing a canal that at some
point in the future would have to be improved with larger locks and
channels, or completely redesigned without locks, rather than bear the
negative consequences of committing themselves to a sea-level project
that risked exceeding the limits and expectations of time and resources
allowed to them by Congress and the President. Chief Engineer Stevens and other members of the Isthmian Canal Commission between
1905 and 1907, none of whom represented irreplaceable personalities
to the financial fortunes of the endeavor, recognized that the best decision was not to overpromise and then under-deliver.
36
chapter two
Ordinary American engineers stuck in field conditions who had had

experience using heavy equipment and supervising laborers to build
railroads, dams, and harbors probably did not have any particular
hang-ups or strong feelings that there was a special importance to be
attributed to achieving another forty or sixty feet of channel excavation to summit level. I like to imagine that at least one impertinent
junior American engineer blurted out the simple question, Sea-level
canal? Why not just put some locks on either end and be done with
this, so we can get out of here? The report of Chief Engineer John F.
Stevens in 1905 conveyed approximately the same sentiment. Stevens,
an important advocate of a lock canal, put the entirety of the Panama
Canal project this way:
There is no element of mystery involved in it. No problem now apparent (I refer to purely physical problems) but what can be successfully
solved the problem is one of magnitude and not of miracles; although
the time required and the consequent cost will be more dependent upon
the kind of canal to be built to a far greater extent than has been, I fear,
appreciated.
Stevens advocated a lock canal and as Chief Engineer attached his

views to a minority report of a board of consulting engineers in 1906.
The Commission accepted the minority report, and after a Senate and
House vote in favor of a lock canal, President Roosevelt in June 1906
executed a plan for a canal with a set of locks on the Atlantic side, a
set of locks on the Pacific side, and a central artificial lake.
3. Controlling How Water Moves Through a Built Environment
The priorities of the Isthmian Canal Commission were fundamentally
Atlantic-oriented, beginning with the harbor and entrance channel
adjacent to Coln but eventually extending to the Atlantic-draining
Chagres River. A working harbor on the Atlantic side at Cristobal
would be first. Most of the material, heavy equipment, and immigrant workforce would have to be delivered by steamships from the
East Coast of the United States or the Caribbean, making port on
the Atlantic Ocean side. The breakwaters and navigation channel for
the harbor on the Pacific Side at La Boca were planned to begin after
most of the harbor improvements at Cristobal had been completed.
Far more challenging than harbor improvements was the problem
of controlling surface water runoff. The Commissions solution was to
construct dams and build an artificial lake out of the Chagres River
37
drainage basin. There were two reasons for this. One reason was to
avoid having to do a great deal of work excavating a deep freshwater navigation channel. Another reason for inundating the watershed
was to reduce the risks of flooding and erosive runoff into a vulnerable artificial river channel surrounded by steep slopes. Thus the plan
was to flood as much of the watershed as possible and then regulate
upstream reaches with control measures at several strategic stream
inputs. The Commission stated in 1904:
The floods of the Chagres River are at times so sudden and of such magnitude that from the inception of the work of the Old Panama Company
to the close of the investigations of the former Isthmian Canal Commission, it has been considered of the utmost importance to control them
effectually, whether the sea-level canal or a canal with locks to be constructed. In the former case it would be highly objectionable to receive
the flood waters of the river into the canal, as it would be difficult to
prevent damage by the currents induced on the one hand, and by the
silt, sand, and gravel brought in on the other.21
There were three options for dams on the lower reaches of the Atlantic-oriented Chagres River. In addition, there were plans for supplementary dams in the middle reaches of the Chagres River. Finally, the
Commission noted that one of its largest field survey parties was to be
devoted to understanding the uppermost reaches the Chagres River at
its headwaters near the continental divide, with a plan to eventually
divert normally Atlantic Ocean draining river water the opposite way
across the continental divide and towards the Pacific Ocean. The Commission planned a dredging project for the navigation channel in the
deepest portions of the soon to be created 20 to 25 mile-long artificial
Gatun Lake.
A dry excavation project would proceed through the continental divide using an efficient system of railroads to carry away massive amounts of excavated rock material overland until a waterborne
system was possible. Excavation of the future freshwater navigation
channel on the Pacific side of the continental divide would take advantage of the stream channel eroded by the Pacific-draining Rio Grande.
Luckily, the Rio Grande did not have the same risks of violent flooding
as its Atlantic-draining counterpart the Chagres River.
21
Isthmian Canal Commission Annual Report (1904, 40).
38
chapter two
Finally, lock construction under dry conditions was to proceed as

a separate engineering project. When the Culebra Cut, Pacific side
navigation channel, and Pacific side set of locks were sufficiently completed under dry conditions, then water from the upper reaches of the
Atlantic-oriented Chagres River watershed would be redirected and
allowed to flow towards the Pacific Ocean. The railroad system for carrying away excavated rock material overland would be removed and
replaced by a much more efficient waterborne system using barges, as
channel modification would thereafter be a wet excavation or dredging project.
D. Why an Artificial Strait Will Reach Maximum
Sustainable Capacity Between 2009 and 2012
Unless Enhanced
1. The Third Set of Locks Project and Maximum Sustainable Capacity
Since the Isthmian Canal Commissions report in 1904, a number
of commissions have been established to explore the feasibility of a
third set of locks or even a sea-level canal. In 1913, at the high point
of employment during the initial construction phase of the Panama
Canal, the total workforce totaled nearly 40,000 people. That number
declined precipitously after 1913 until 1939. A major wartime construction effort for a Third Locks Project was begun in Panama by
the United States federal government in 1939, led by a Special Engineering Division. At one time during excavation for the Third Locks
Project, in 1942, the total workforce exceeded 37,000 people, nearly
as large as the largest workforce ever employed by the Panama Canal
between 1904 and 1914 (see also Figure 18). However, the Third Locks
Project and the Special Engineering Division were eventually terminated after the end of World War II on 30 June 1949.
Other commissions followed. An Atlantic-Pacific Interoceanic
Canal Study Commission was established in April 1965 to investigate
routes for a sea-level canal and even explore the possibility of excavation using nuclear explosives. As part an obligation resulting from the
1977 Panama Canal treaties, a Joint US-Panama-Japan Commission to
Study Sea-Level Canal and Alternatives (tripartite commission) was
established in 1986. The tripartite commissions study was published
in 1993 and recommended a third set of locks and ruled out construction of a sea level canal due to its high cost, low profitability, and
39
negative environmental impacts. The tripartite reports recommendations in 1993 were synthesized and expanded by the former Panama
Canal Commission (19791999) and by the Panama Canal Authoritys
Capacity Projects Office.
The Panama Canal Authority published its plan for a Third Set of
Locks Project on 24 April 2006, translated into a roughly 100-page
English document. The Third Set of Locks Project is more or less a
summary of a longer and more detailed Panama Canal Master Plan,
a synthesis of 140 studies and reports published on 7 June 2006 in
a 500-page document available only in Spanish.22 The stated goal of
the Third Set of Locks Project (20052014) is to expand the Panama
Canals maximum sustainable capacity. The Panama Canal Authority intended to deepen both Atlantic and Pacific Ocean seawater access
channels, construct a larger set of locks alongside existing locks, lower
the summit by deepening the interior freshwater navigation channels,
and raise the level of Gatun Lake. Excavations for the larger set of
locks would take advantage of significant portions of the excavation
that was initiated by the United States for a third set of locks just prior
to and during World War II.23
1.1 Maximum Sustainable Capacity
The Panama Canal Authoritys proposal for the Third Set of Locks
Project included the following three improvement projects:
The third set of locks project is a plan to expand the Canals capacity
composed of three integrated components: (1) the construction of two
lock facilities one on the Atlantic side and another on the Pacific side
each with three chambers, each which include three water reutilization
basins; (2) the excavation of new access channels to the new locks and
the widening of existing navigational channels; and, (3) the deepening
of the navigation channels and the elevation of Gatun Lakes maximum
operating level.
During the establishment of the tripartite commission in 1986, a

gathering of consulting experts was convened to lend their thoughts
about building a sea-level canal. These experts offered an interesting
and simple insight. They said that the question was not whether or
22
Panama Canal Authority (2005), Autoridad del Canal de Panam (2006).

See Brad Reagan, The Panama Canals ultimate upgrade Popular Mechanics,
February 2007, for an explanation of how the third set of locks work, particularly their
use of water-saving basins.
23
40
chapter two
not to construct a sea-level canal, but whether the existing Panama

Canals capacity had to be enhanced, and at what point.24 The basic
rationale for the Third Set of Locks Project is that the Panama Canal
is expected to reach its maximum sustainable capacity sometime
between 2009 and 2012, after which the canals level of service will
deteriorate with the probability that it would irrevocably lose market
share. The Panama Canal Authority arrived at this judgment based on
a demand model suggesting that the maximum sustainable capacity of
the Panama Canal was between 330 and 340 million (PC/UMS) tons.
For reference, in 2005 at the time of the Master Plan report, 279 million (PC/UMS) tons transited the Panama Canal.
The term maximum sustainable capacity is defined by the Panama
Canal Authority as the maximum volume of traffic that the canal can
accommodate over the long run steadily and predictably with fast,
reliable, and secure service and without discrimination. Maximum
sustainable capacity refers to a level of service, convenience, or customer satisfaction not an absolute level of throughput or maximum
permissible draft, an important distinction. Above and beyond the
number of vessels that can transit with the highest level of service,
vessels will still be able to transit the Panama Canal at acceptable
or unacceptable levels of service. However, providing acceptable or
unacceptable levels of service poses risks that the Panama Canal will
lose customers. The Panama Canal Authority states:
It will go from a Canal that serves growing transcontinental routes to a
stagnant Canal, depending on a few routes in which users will be more
sensitive to tolls increases. Without an expansion, the Canal would face
new competitors as well as permanent and irreversible changes in trade
patterns in which Panama would stop being relevant as a global maritime route.25
Though each vessel market is different, important segments of the

Panama Canals market like container ships are much more susceptible to deviations in level of service than other vessels like dry bulk
carriers.
24
General Accounting Office, Panama Canal: Establishment of Commission to Study
Sea-Level Canal and Alternatives, Briefing Report to the Honorable Webb Franklin,
House of Representatives, April 1986 (Washington, D.C.: GAO, 1986).
25
Panama Canal Authority (2005, 41).
41
1.2 How Much the Third Set of Locks Project Will Cost
A study funded by the Panama Canal Commission and produced by
the United States Army Corps of Engineers evaluated the status and
future of the Panama Canal just prior its transfer to the Republic of
Panama on 31 December 1999. Many of the recommendations of
the evaluation were incorporated into canal modernization programs
between FY 1996 and 2005 costing nearly $1.4 billion dollars.
To reduce the risk that the Panama Canal could lose its share of
time-sensitive vessel markets like container ships before the end of
Third Set of Locks Project in 2014, the Panama Canal Authority in
2005 began implementing a series of ten interim projects. The ten
projects are estimated to cost $496 million, and are not included in
the cost of the Third Set of Locks Project. The ten interim projects
include 1) improving the lighting system for the locks to maximize
their use at night, 2) widening the Gaillard (Culebra) Cut, 3) building
two vessel tie-up and landing stations near Pedro Miguel Locks, 4)
using a more efficient carousel system to tow vessels through Gatun
Locks, 5) updating the tug fleet, 6) improving the ship scheduling system, 7) deepening the Gatun Lake interior freshwater navigation channel, 8) deepening the Atlantic and Pacific seawater entrance channels,
9) modifying the existing locks to add about a foot more depth, and
finally 10) adding some additional structures to the Gatun Dam and
spillway.
The Third Set of Locks Project is estimated to cost $5.25 billion.
There are two ways to compare the Third Set of Locks Project with the
original Panama Canal construction project between 1904 and 1914.
One way is to deflate the Third Set of Locks Project to 1904 dollars.
Another way is to inflate the approximately $352 million originally
appropriated by Congress on the construction of the Panama Canal
between 1904 and 1914 to contemporary dollars.26 A $5.25 billion
expansion project in 2007 dollars would be equivalent to over $225
million in 1904 dollars using a consumer price index deflator method
(or in 2009 dollars it would be equivalent to $317 million in 1904
26
There are multiple ways of converting historical dollars but for investment and
government projects it has been recommended to use a GDP deflator method. See
Six ways to compute the relative value of a U.S. dollar amount, 1774 to present, 2010
(http://www.measuringworth.com/uscompare/). For most of the conversions in this
book unless otherwise specified, the dollar amount was divided using inflation conversion factor data based on a consumer price index method provided by Robert Sahr,
2008 (http://oregonstate.edu/cla/polisci/faculty-research/sahr/sahr.htm).
42
chapter two
dollars using a GDP deflator method). The other way around, the $352
million original construction project between 1904 and 1914 would be
equivalent to $8.2 billion in 2007 dollars using a consumer price index
deflator method (or $5.84 billion in 2009 dollars using a GDP deflator
method). Either way, the total estimated cost of the Third Set of Locks
Project is equivalent to between two-thirds and ninety percent of what
was spent by Congress for the original Panama Canal by 1914. If one
goes further and adds the nearly $1.4 billion spent between FY 1996
and 2005, plus the $496 million being spent by the Panama Canal
Authority for its ten interim projects in 2005, then the amount that
will have been spent on enhancements to the Panama Canal between
1996 and 2014 is about $325 million adjusted to 1904 dollars, roughly
equivalent or even greater than what Congress spent for construction
of the Panama Canal between 1904 and 1914.
1.3 How it Makes Operations Safer, More Productive, and More
Efficient
The Panama Canal can be split into five channels corresponding
to its Atlantic-draining aspects, its Pacific-draining aspects, and its
central channel through Panamas continental divide. The five waterways include channels 1) from the Pacific Ocean to Miraflores Locks,
2) from Miraflores Locks to Pedro Miguel Locks across Miraflores
Lake, 3) from Pedro Miguel Locks to Gamboa across the continental
divide through the Culebra Cut area, 4) from Gamboa to Gatun Locks
across Gatun Lake, and finally 5) from Gatun Locks to the Atlantic
Ocean (see Figure 2).
The centrally-located channel from Pedro Miguel Locks to Gamboa
across the continental divide through the Culebra Cut has the greatest
restrictions on navigation due to its dimensions and the surrounding
topography, geology, and weather conditions. During the 1st Universal Congress of the Panama Canal in 1997, it was first brought to the
attention of the author that the constraint to total throughput of the
Panama Canal was not the locks but the interior freshwater navigation channels. The locks reportedly had the capacity to transit between
44 and 46 vessels per day.27 Unsafe hydrodynamic circumstances that
occur whenever very large vessels pass in close proximity constrain the
27
Personal communication, 1st Universal Congress of the Panama Canal, Panama
City, Republic of Panama, September 710, 1997.
43
daily throughput in the narrowest interior channel in the Culebra or

Gaillard Cut area to 38 vessels per day, which in effect bottlenecked
the throughput of the entire Panama Canal system. It is not clear
whether the constraints discussed during the 1st Universal Congress
of the Panama Canal in 1997 reflected use of the convoy system, in
which vessels transit in long groups from one ocean to another like
two trains sharing the same track, rather than continuously in both
directions like cars sharing a one-lane road.
There are also several structural bottlenecks that constrain how
large vessels can safely transit the Panama Canal, although different
rules apply based on the vessel type or peculiarities about its configuration.28 Given the dimensions of the current locks and channels, the
Panama Canal Authority prohibits transits of any vessels that exceed
certain safety margins including a length at the waterline no longer
than 965 feet (294.13 m), a maximum beam or width of the hull at the
waterline no wider than 107 feet (32.61 m), and a maximum height
above the waterline no higher than 205 feet (62.5 m) in order to clear
the Bridge of the Americas. The maximum permissible draft or depth
below the waterline has been set at no deeper than 39 feet 6 inches
(12.0 m) Tropical Fresh Water (TFW) for some time, as long as Gatun
Lake water levels are at least 81 feet 6 inches (24.8 m) and Miraflores
Lake levels are at least 54 feet 6 inches (16.61 m). The shallowest part
of the entire Panama Canal channel is at the hinges or sill of the south
lock gate of Pedro Miguel Locks. Under maximum permissible draft
circumstances there is a safety margin of 5 feet (1.5 m) in the interior
freshwater channels, but only 1 foot 8 inches (0.50 m) over the south
sill of Pedro Miguel Locks.
E. Conclusion
Explorers, surveyors, and engineers recognized in the physical environment of Panama that there was a set of river valleys and relatively
low topographic relief that had created a relatively short and straight
route across the isthmus connecting North and South America that
would make it easier to build technologically-enhanced means for
interoceanic exchange of goods, people, finance, and messages. The
28
See Panama Canal Authority, MR NOTICE TO SHIPPING No. N-12005 (Panama City: Panama Canal Authority, 2005).
44
chapter two
geologic legacy left behind by a natural strait that once existed across
Panama as late as 46 million years ago became known as route 8
by the Isthmian Canal Commission in 1901, and was selected by the
United States federal government as the location for an American
canal after purchasing the assets of a French company that had begun
excavation in 1880.
The physical and built environment on the Isthmus of Panama
has undergone three major modifications supporting three different
periods of interoceanic transportation technologies in the past. The
first technology was a trail and barge system built by Spanish colonial
administrators called the Royal Road and Las Cruces Trail (15401740)
to service Spanish flows of finance in the form of precious minerals
from Peru. The second technology was a railroad built by the Panama
Railroad Company (18521869) to service American flows of passengers, baggage, and freight. The third technology was the Panama Canal
(1914-date) to service global flows of goods carried in vessels, originally
constructed by the United States federal government but currently as
of the date of the writing of this book being significantly enhanced by
the Panama Canal Authority of the Republic of Panama.
PART TWO
FLOWS THROUGH THE ENVIRONMENT
CHAPTER THREE
INTEROCEANIC FLOWS IN TRANSIT THROUGH PANAMAS

HUMAN-BUILT ENVIRONMENT
A. Introduction
The three technologies and their most important periods of operation
include the Royal Road and Las Cruces Trail (15401740), the Panama Railroad (18521869), and the Panama Canal (1914date). Each
of the three technologies served flows of different kinds. Use of the
Royal Road and Cruces Trail was dominated by the flow of finances
in the form of silver bullion conveyed from the Andean highlands of
Peru across Panama to Spain, as well as commercial goods associated
with fairs, and passengers or messages for the colonial administration. Most of the Panama Railroads earnings before 1869 came from
flows of American passengers and baggage. American freight goods
were also a significant market for the railroad, and finances and mail
taken together may have accounted for about ten percent of the Panama railroads business. Use of the Panama Canal, of course, has been
dominated by finished and unfinished goods conveyed in oceangoing
vessels.
The Panama Canals earnings from tolls can be broken down into
seven market segments based on the category of vessel charged,
including three types for transporting unfinished goods (bulk carriers, tankers, and refrigerated ships), two for transporting finished
goods (container ships and vehicle carriers), one type for transporting
passengers (cruise ships), and finally one non-specialized type of vessel (general cargo). General cargo vessels and vessels for transporting
unfinished goods used to be the Panama Canals most important market until recently, when vessels transporting finished goods became
the Panama Canals most important source of toll revenue.
B. The Royal Road and Cruces Trail 15401740
The peak period of silver transport across the Isthmus of Panama
was during the first half of the seventeenth century, followed by a
48
chapter three
precipitous decline after 1650.1 The overland transit across the Isthmus
of Panama, however arduous, exposed Spanish royal transport to fewer
dangers than a voyage from Peru to Spain around South America.
There were a number of colonial Spanish trails across the Isthmus
of Panama and one meticulous but brief study merits mention as a
particularly useful synthesis of different cartographic and descriptive
sources.2 There were two routes crossing the Isthmus of Panama for
the trajn or overland transport of silver bullion between the Pacific
Viceroyalty of Peru and Atlantic Spain. One is referred to as El Camino
Real (The Royal Road), also known as the Calle de Santo Domingo or
just simply the Portobelo trail. The other is referred to as the Calle
de la Carrera, also known as the Cruces trail. There is no evidence
for the use of wheeled vehicles on the Spanish roads. Both passengers
and freight were carried on mules that moved in long trains of five
hundred animals, if sixteenth century accounts can be believed, taking
a trip that took four days. Figure 4 shows the relative rise and decline
in the use of the Isthmus of Panama to transport finances as measured
by royal treasure in pesos ensayados, proportional to the maximum
value recorded.3
From the south on the Pacific Ocean side, the Portobelo trail began
at Old Panama, narrowing at points to just two or three feet wide,
crossed the continental divide and continued efficiently in a north to
south direction along the course of an Atlantic oriented river before
finally ending at Portobelo. The Portobelo trail was open during the
summer and dry season but flooded during the winter. By 1740, the
Portobelo trail had apparently become barely passable due to disrepair
and by the time of the Panama Congress in 1826 it was permanently
abandoned.4 The Cruces trail was an intermodal route involving an
8-foot wide, fully-paved fieldstone stone road and a navigable stretch
of the Chagres River, the same river that was dammed by the United
1
See possible conversions of pesos ensayados in John J. TePaske and Herbert S.
Klein, The royal treasuries of the Spanish Empire in America, Volume 2, Upper Peru
(Bolivia) (Durham, NC: Duke University Press, 1982), and Fredercik P. Bowser, The
African slave in colonial Peru 15241650 (Stanford: Stanford University Press, 1974).
2
Roland D. Hussey, Spanish colonial trails in Panama, Revista de Historia de
Amrica 6 (1938): 4774. See the map and the discussion by Hussey (1938).
3
Source for transits of royal treasure in pesos ensayados is Ward (1993, 8), royal
treasure shipped through Panama from Peru, 15511739. Ward spends considerable
time discussing falsification of records of treasure shipped.
4
See Ward (1993) for a discussion of both the Portobelo and Cruces trails.
interoceanic flows in transit
49
States Army Corps of Engineers to become the freshwater channel of

the Panama Canal. The Cruces trail was used during the rainy season
in the winter when the Portobelo trail was flooded and the Chagres
River was navigable further upstream.
Because the Chagres River terminated at Fort Lorenzo on the Caribbean Sea just to the west of Limon Bay, the modern entrance channel
to the Panama Canal, bullion had to be transported coastwise in its
final leg to Portobelo. The leg from the mouth of the Chagres River to
Portobelo was a dangerous trip because it was exposed to attacks by
buccaneers, explaining why the all-land Portobelo trail was the official
trail for transport. Around 1560, foreign corsairs began to appear off
the coasts of Panama to attack the small craft making their way to
and from the mouth of the Chagres River, after which Spanish colonial government projects were funded to fortify the Chagres River and
improve transport over the much more defensible trail to Portobelo,
including stopping points and other services like inns. As early as
1536, the Governor of Panama had proposed that mule carriers be
bonded and taxed by the maritime port cities and the taxes spent on
public works and road improvements. Eventually, in 1538 the Spanish colonial administration ordered periodic maintenance and repairs
to the overland trail using funds from the royal treasury, to be repaid
from a tax on merchandise and bullion in transit.5
During the second half of the 17th century, competition from cheaper
and more efficient alternate routes from the West Coast of South
America to Europe and the opening of commerce in colonial Spanish
America redirected transport of mineral and commercial wealth from
the Viceroyalty of Peru away from Panama. The Isthmuss competitors
were principally French trading vessels coasting off Peru, South Sea
Company ships carrying slaves and other merchandise, and indirect
trade routes from the Andes down the rivers of South America to the
coast of the Atlantic Ocean. Portobelos maritime-commercial decay
had been unfolding since the 1650s, indicated by artificially encouraged droughts of goods in order to create higher prices. However, the
Cruces trail remained in active use until the beginning of construction
for the Panama Railroad.
See Hussey (1938).
4. Flows on the Royal Road and Las Cruces Trail, the Panama Railroad, and the Panama Canal
50
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51
C. The Panama Railroad 18521869

In 1800, it would take five weeks to travel overland from New York
City to the banks of the Mississippi River. By 1830, it took two weeks
for people from New York to reach the Mississippi River. By 1857,
it took less than five days to reach the Mississippi River from New
York. Despite the faster rates of travel from New York City to inland
port cities like St. Louis on the banks of the Mississippi River, travel
by wagon road from St. Louis across the western interior to Oregon
Territory and California took three to five weeks. Before the first transcontinental railroad in 1869, flows of goods, people, finances, or messages from the Atlantic Coast to California and Oregon Territory only
had three other options.
The shortest route for finance and mail was a route overland across
the Appalachian Mountains or up the Mississippi River to St. Louis,
across the vast interior of the Mississippi River basin by wagon road
to an interior city like Salt Lake City, and then on to the Pacific Coast
by wagon road. The longest but probably most economical route for
high-bulk low value goods was circum-continental, an all-water route
by ship from the Atlantic Coast detouring almost as far east as south
around South America to the Pacific Coast of North America. In some
ways the most expeditious transcontinental route for passengers and
higher-value lower-bulk freight was a part land-part water route from
the Atlantic Coast south to the Caribbean Sea, followed by an overland
transit at one of several different points including Colombia (Panama),
Nicaragua, Tehuantepec (Mexico), then continuing on by ship to the
Pacific Coast.
On 10 May 1847, an exclusive franchise for a railroad across Panama was granted by the Republic of New Granada to Mateo Klein representing the Panama Company of Paris. The Panama Company
failed to make the necessary deposit of finances and on 28 December
1848 the exclusive franchise was transferred to the Panama Railroad
Company of New York. The Panama Railroad Company began construction on a railway between Aspinwall (Coln) and Panama City
in 1851.6 The New York based company recorded its first earnings in
6
See also U.S. Congress, Senate, Report of Joseph L. Bristow, Special Panama Railroad Commissioner to the Secretary of War, 59th Cong., 1st Sess., Doc, No. 429, 24
June 1905 (Washington, D.C.: GPO, 1906).
52
chapter three
1852 on a partially completed railway, three years before the entire line
was completed on 27 January 1855, and effectively paid off its initial
capital investment of $8 million ($200 million adjusted to 2007 dollars) in 1858 with its net profits after only six years of operation.
The movement of passengers between New York and San Francisco
was one of the important functions of the early Panama Railroad. All
told, according to one source, between 1848 and 1869 the Panama
Railroad served about 600,000 passengers traveling between New York
and San Francisco.7 Figure 4 illustrates the rise and fall of transits on
the Panama Railroad as measured by the relative value of merchandise
both foreign and United States in unadjusted dollars, proportional to
the maximum value recorded.8 For the period that the Panama Railroad Company reported gross receipts by category of transit between
1857 and 1868, on average 46 percent of the Panama Railroads gross
earnings came from transits of freight and baggage, 43 percent were
from transits of passengers, 7 percent came from transits of treasure,
and 3 percent came from transits of mail. The most profitable year for
the Panama Railroad was 1868. The company reported annual gross
receipts of about $4.5 million ($65 million adjusted to 2007 dollars)
and annual net surplus earnings after expenses and other various costs,
including an annuity to Colombia, of about $2.5 million ($36 million
adjusted to 2007 dollars). After the famed linking of the Union Pacific
and Central Pacific railroads on 10 May 1869 at Promontory in Utah
Territory, the gross earnings of the Panama Railroad fell abruptly.
Information about earnings between 1868 and 1873 is not consistent
in the Annual Reports of the Panama Railroad Company. However, the
downward trend after the construction of the Union-Pacific Railway
in May 1869 seriously impacted the Panama Railroad, as it did likewise to use of the Rio San Juan across Nicaragua and the Tehuantepec
railway across Mexico. The Nicaraguan route appears to have been an
even more temporary option than the Panama Railroad. Whereas the
Panama Railroad line served as a temporary option between 1852 and
7
John H. Kemble, The Panama route, 18481869, reprint of 1943 ed., (New York:
Da Capo Press, 1972). See Appendix II (p. 253) for an explanation of limitations with
figures.
8
Source is U.S. Department of Commerce, Bureau of the Census, Foreign commerce and navigation of the United States (Washington, D.C.: GPO, various years after
1912). Data is the value of domestic and foreign merchandise (including coin and
bullion) in transit across the Isthmus of Panama in unadjusted dollars.
53
1869 while the Union-Pacific railway line was being completed, the
Rio San Juan route served as an even more temporary option between
1852 and 1855 while the Panama Railroad line was being completed.
Use of Cape Horn as measured by the net tonnage of vessels entered
and cleared between Atlantic and Pacific ports of the United States
between 1853 and 1915 did not appear to experience a precipitous
decline after the linking of the Union-Pacific railway in May 1869.
The Panama Railroad Company experienced a second peak in the
earnings between 1883 and 1888, during the high point of the activities of the French La Compagnie Universelle du Canal Interoceanique.
The gross earnings of the Panama Railroad Company appear to have
increased to a level exceeded only by the companys very best year in
1868. Yet during the same period net surplus earnings after expenditures were at an all time low. In 1885, net surplus earnings fell to
practically nothing. Not only did the rail infrastructure require major
improvements but the company had decided to reduce its freight rates
in 1885 with its two major customers, the Pacific Mail Steamship
Company and La Compagnie Universelle du Canal Interoceanique.
Lower freight rates resulted in an increase in the amount of traffic
after 1885 but not enough to compensate for a loss of earnings due to
the reduction in freight rates. Instead of earning $868,000 ($19.3 million 2007 dollars), which would have been the gross revenue of 1886
traffic based on 1885 freight rates, the company earned only $119,000
($2.6 million 2007 dollars).
If its financial problems were not enough, the companys wharves
and freight sheds at Coln (Aspinwall) were totally destroyed by a
fire on 31 March 1885 as a result of civil unrest in the transit cities. A
more detailed breakdown of the companys expenditures between the
problem years of 1881 and 1894 illustrates where the company had
to spend nearly all of its surplus revenues, e.g., to maintain the line
of the road and repair the damage caused by fires. According to the
1885 Annual Report of the Panama Railroad Company, the price tag
on the damage caused by the 1885 riots alone came to a grand total of
$844,000 ($18 million 2007 dollars). Not surprisingly, the breakdown
of total rail tonnage by through and local traffic suggests that by the
end of the nineteenth century the Panama Railroad went from a coastwise interoceanic carrier to a short-haul line handling local traffic for
the construction of its replacement, the Panama Canal.
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chapter three
D. The Panama Canal 1914date
It was not until after World War II that foreign waterborne commerce
by tonnage through the Panama Canal experienced any increase,
which to date continues to rise. Figure 5 shows monthly trends in
long tons (2,240 lbs.) of cargo in transit through the Panama Canal
from 1914 to 2008, correlated with important events like World War
I, the Great Depression, World War II, and the disruption in use of
the Suez Canal.9 Before World War II, the most important route using
the Panama Canal was the coastwise trade between the Atlantic and
Pacific coasts of the United States (see Figure 6). After World War II,
the dominant trade route in terms of tonnage was the East Coast of
the United States and Asia route (A in Figure 6), followed by the East
Coast of the United States and West Coast of South America route
(C in Figure 6), followed by the Europe to West Coast of South America route (E in Figure 6).
The third objective of the Panama Canal Authoritys Third Set of
Locks Project was to attract a larger share of the interoceanic transit
business and compete with other routes like the Suez Canal and the
transcontinental railroads in seven key market segments. Currently,
the most important route generating income for the Panama Canal
is the Asia to East Coast of the United States container vessel market
segment. The growth in revenues from container vessels over those of
bulk carriers has been a relatively recent development for the Panama
Canal, and any of the seven key market segments may reasonably fluctuate above or below expectations to the year 2025 due to unexpected,
unanticipated, or random events.
Inferences about trends and fluctuations in the use of the Panama
Canal are circumscribed to a global potential interoceanic service
area where there exists at least a marginal savings in distance over
other alternatives like the Suez Canal. The Panama Canals interoceanic transit market can be broken down into segments based on vessel specialization to carry certain types of goods or people. General
inferences can be made about trends and major changes but more
information is usually required in order to explain anything specific
9
The source for Figures 5, 6, and 7 are the Annual Reports of the various Panama
Canal operating agencies, including the current Panama Canal Authority. All years are
fiscal years unless otherwise indicated.
5. Monthly tonnage through the Panama Canal 19142008

55
6. The top twelve trade routes through the Panama Canal by tonnage 19262008
56
chapter three
57
about their causes. For instance, one can recognize that container vessels replaced bulk carriers as the most valuable segment of the market
for the Panama Canal in 2001 and then continued to rise sharply.
Inferences about the Panama Canals market can be aided significantly after segmenting different vessel types by the geographic route
they take and then correlating trends and fluctuations with changes
in policy or historical events. Since 1926, the Panama Canal annual
reports have listed the top 12 principal trade routes using the Panama
Canal by origin and destination (see Figure 6). For instance, determining that most of the increase in container vessel traffic after 2001
occurred on the East Asia to the East Coast of the United States route
highlights the economic development of China but can also be correlated with trade policies. On 11 December 2001, China became a
member of the World Trade Organization. As part of its membership negotiations, China committed to reduce trade barriers, in return
for which the United States and other nations reduced their limits on
Chinese imports. In addition, determining that at the same time there
was also a leveling off or decrease in bulk carrier traffic from the Gulf
Coast of the United States to East Asia highlights the potential influence of competition with the United States from other countries not
in the same position to use the Panama Canal or protectionist policies
in China aimed at agricultural self-sufficiency.
Inferences can be aided even more by yet further segmenting the vessel
and geographic route market by principal commodities. Since 1914,
the Panama Canal annual reports have recorded long tons (2,240 lbs)
of all principal commodities transported by vessels in transit and
conventionally grouped into thirteen general categories including (in
alphabetical order), canned and refrigerated goods; chemicals and
petroleum chemicals; coal and coke; containerized cargo; grains; lumber and products; machinery and equipment; manufactures of iron
and steel; miscellaneous minerals; nitrates, phosphates, and potash;
ores and metals; other agricultural commodities; and petroleum and
products.
At a certain point, a market segmentation analysis pursued over a
long enough span of time and with a fine enough level of granularity
becomes, in effect, a detailed sample of globalization and the growth
of the maritime world economy since 1914. For example, one can correlate the leveling off or decrease in bulk carrier traffic with the reduction in soybeans and other grains grown by producers in the Midwest,
particularly Iowa, and exported from the Gulf Coast of the United
58
chapter three
States to East Asiahighlighting the influence of competition from

soybean producers in southern Brazil.
1. The Panama Canals Historical Market Segmented by Vessel Type
The Panama Canal Authority suggests that the major historical trend
in Panama Canal transits has been fewer transits but by larger ships,
resulting in an overall increase in tonnage. The most significant recent
trend in traffic through the Panama Canal was driven by personal consumption on the East Coast of the United States for manufactured
goods from East Asia, especially China, carried in container vessels. The Panama Canal Authority used models to estimate growth
in revenues by segmenting its transit market into seven general types
of vessel, based on how the ship has been specifically built or outfitted to transport a particular type of good. Specialized bulk carriers,
tankers, and refrigerated ships transport unfinished goods. Specialized
container ships and vehicle carriers transport finished goods. Specialized cruise ships transport passengers, and finally, general cargo ships
transport any type of goods are thus are the only non-specialized vessel market that the Panama Canal Authority considers.
It is easy to recognize that the seven market segments mentioned
by the Panama Canal Authority simply continue categories that
have been in use since 1929, revised in 1968 and 1992, distinguishing tolls paid by vessel type whether laden with goods or in ballast,
and whether traveling from the Atlantic to the Pacific or from the
Pacific to the Atlantic. The Panama Canal Authoritys seven market
segments are, in order by the date in which they appear in the annual
reports of the operations of the Panama Canal, general cargo ships
(1929), passenger ships or cruise ships (1929), tankers (1929), bulk
carriers (1938), refrigerated ships (1968), container ships (1968), and
vehicle or machinery carrier ships (1992). There are two other categories of vessels not mentioned by the Panama Canal Authority probably
because they have never, historically, been a significant source of revenue for the Panama Canal. The two unmentioned categories include
naval vessels (1929) and other vessels (1929) such as barges, dredges,
dry docks, tugs, yachts, and even the occasional swimming human
being. Figure 7 shows Panama Canal toll revenues in adjusted dollars
by vessel market segment between 1929 and 2008. Figure 7 illustrates
that toll revenues from bulk carriers increased sharply in 1968 and by
1972 had replaced general cargo ships as the main source of revenues
7. Toll revenue in adjusted dollars by vessel market segment 19292008

59
60
chapter three
from tolls until 2001, when tolls from container vessels increased dramatically, currently accounting for the dominant share of the Panama
Canal Authoritys total revenues.10
1.1 Specialized Vessels Carrying Unfinished Goods
There are three different types of specialized vessels using the Panama
Canal that transport unfinished goods. The first type of vessel is the
bulk carrier, designed to transport dry unfinished materials and unfinished products in loose form. Bulk carriers store unfinished goods that
do not require refrigeration. Goods are handled at ports and terminals
equipped with elevators, conveyors, or suction hoses. Bulk carriers specialize in grains and forestry products such as corn, soybeans, wheat,
lumber, wood chips; as well as minerals, ores, coal, coke, manufactured iron and steel, nitrates, phosphates, potash, copper, aluminum,
sugar, salt, and cement.
Another type of specialized vessel for unfinished goods are tankers, designed to transport liquid unfinished materials like crude oil or
refined oil products like diesel fuel, gasoline, jet fuel, liquefied natural
gas, and other chemicals. Finally, a third type of specialized vessel for
carrying unfinished goods are refrigerated ships, fitted with holds for
transporting perishable materials or agricultural products that require
constant refrigeration including fruits, meats, and dairy.
1.2 Specialized Vessels Carrying Finished Goods
There are two types of specialized vessels using the Panama Canal that
transport high value per weight finished goods. The first type of specialized vessels are container ships designed to transport finished products
and merchandise packed into modular containers and often stacked
high on deck. Another type of specialized vessel for finished goods
are vehicle carriers equipped with ramps so that cars, trucks, tractors,
or heavy equipment and machinery can essentially load themselves
on and off the ship. There is one type of specialized vessel using the
Panama Canal that transports people. Cruise ships carry passengers on
pleasure trips through the Panama Canal as part of a tourist experience. Government warships, though never a significant source of toll
revenue, represent another type of specialized vessel for transporting
10
The years 1938 and 1968 in Figure 7 represent years when new vessel types were
accounted for.
61
military personnel as well as the onboard weapon systems they are

trained to operate.
Finally, mixed among the six types of specialized vessels are unspecialized general cargo ships. Unspecialized general cargo ships might
appear like something of an anachronism, relegated to transporting a
small but wide variety of unfinished and finished products on regional
routes. General cargo vessels had been the most important source of
toll revenue for the Panama Canal since at least 1929, when the annual
reports began listing toll revenues in dollars by vessel type. In 1972,
general cargo vessels were finally supplanted by specialized bulk carriers as the most important source of toll revenue for the Panama Canal,
a process that had begun with a rapid increase of bulk carrier traffic
after 1967, coincident with the closure of the Suez Canal.
1.3 Waterborne Trade of the United States through the
Panama Canal
Between 1967 and the time of the turnover of all operations to Panama
in 1999, the trend in the proportion of global waterborne commercial
trade that used the Panama Canal showed a slight decrease from about
five percent to a little less than four percent by tonnage. The general statistics presented during the Senate Foreign Relations Committee hearings in 1977 and 1978 suggested that the Panama Canal was
becoming less important to United States waterborne trade.11 However, as shown in Figure 8, the actual trend in use of the Panama
Canal as a percentage of all American foreign waterborne commerce
in long tons between 1950 and 2005 has remained steady at about 12
percent, with a low of 8.6 percent in 1952 and a high of 16.7 percent
in 1971.12 In other words, since 1950 a steady average of 12 percent
of all United States foreign waterborne trade by tonnage has arrived
or departed through the Panama Canal. Another steady trend is that
11
Norman J. Padelford and Stephen R. Gibbs, Maritime commerce and the future of
the Panama Canal (Cambridge: Cornell Maritime Press, 1975). The figures in Padelford and Gibbs (1975) were not adjusted for fiscal and calendar year differences.
12
Data in Figure 8 were calculated by converting monthly U.S. foreign waterborne
trade data in tons to fiscal years and long tons in order to match Panama Canal data
for routes departed from or bound for the coast of the United States, but not including
the coastwise trade. Monthly U.S. foreign waterborne trade data comes from several
sources including, U.S. Department of Commerce, Bureau of the Census, FT 985: US
foreign waterborne trade (Washington, D.C.: GPO, 19531995) and comparable later
publications from the U.S. Maritime Administrations Waterborne Databank.
8. Percentage of U.S. foreign waterborne trade through the Panama Canal 19502005
62
chapter three
63
since the 1930s, about two out of every three long tons of cargo that
transits the Panama Canal has departed from or been bound for a port
in the United States.
E. Conclusion
Taking advantages of physiographic circumstances left behind by an
ancient seaway long since raised from the sea, three major interoceanic transportation technologies have been built across the Isthmus of
Panama. The three technologies and their most important periods of
operation include the Royal Road and Las Cruces Trail (15401740),
the Panama Railroad (18521869), and the Panama Canal (1914
date). Use of each built environment for interoceanic transit of goods,
people, finances, and messages lends insight into the nature of flows
through Panamas environment, sustaining one part of Panamanian
society for centuries and furthering the process of globalization.
During either ascending or declining phases of the three major
cycles of maritime-commercial activity (Spanish trails, Panama Railroad, Panama Canal), maintaining elite family status and wealth
required having the geographic mobility to escape the relative lack of
wealth in the interior as well as the fluctuation of foreign commercial
transport as a function of the comparative advantages of Panamanian
inter-oceanic technologies. By migrating to the interior of Panama
during the declining phase of a commercial cycle, elite Panamanian
families could maintain their status if they owned land or could secure
administrative positions. By moving to the maritime cities of Panama
during the ascending phase of a commercial cycle, elite families could
accumulate wealth if they had the right connections with foreign merchants and could charge high markups on transit services by co-opting
local political authorities, who were also likely to be family relations.
The ascending and descending phases of flows through the environment of Panama are of special interest because they were the driving
forces behind a split disposition in Panamanian society, the origin of
two different kinds of territoriality over foreign flows in transit, and
essentially two different kinds of Panamanian. Socio-geographic
migrations between the interior of Panama and the port cities was first
limited to the elite but by the early 20th century it was common among
even the most non-elite. The next part will focus on both Panamanian and American territoriality in geographic perspective. American
64
chapter three
territoriality involved enduring differences of opinion about the foreign policy of the United States and the expansion of the powers of
the federal government over transportation improvements. Panamanian territoriality involved growing political rivalries and opposition
between Panamanians from the interior and those from the port cities,
who had fundamentally different points of view about what was best
for the Republic of Panama with respect to the wealth of the Panama
Canal, and the territory of the Canal Zone.
PART THREE
TERRITORIALITY OVER FLOWS THROUGH

THE ENVIRONMENT
CHAPTER FOUR
PANAMANIAN TERRITORIALITY IN
GEOGRAPHIC PERSPECTIVE
A. Maritime-Commercial and TerritorialAdministrative Societies
To the untrained eye, all places in Panama look accessible to the sea.
As one moves east to west along the Isthmus of Panama, the first environment one encounters is an eastern frontier of sparsely populated
tropical lowlands and mountains known as the Darien province. Figure 9 shows the Isthmus of Panama, the Republic of Panama, and
Darien area of eastern Panama. Continuing west to the middle of the
Isthmus of Panama at its narrowest point are the two contemporary
tropical lowland seaports of Coln and Panama City, essentially the
same well-known termini of interoceanic transport since the first overland transport of silver between Peru and Spain on mule roads during
the 16th century (the area labeled as I in Figure 9). The middle of
Panama is oriented generally north and south from the CaribbeanAtlantic to the Pacific between the port cities along inter-oceanic technologies crossing the continental divide.
Continuing further west beyond modern Panama City one encounters a less well-known inland environment from the upland savannas
of the Azuero Peninsula to the western border with Costa Rica, an area
commonly referred to today as el interior. The shaded area in Figure
9 represents the major Pacific watershed of Panama where most all
of the population lives, and the Azuero Peninsula is labeled as II.
Life in the interior is not oriented roughly north and south between
the Atlantic and Pacific. Life in the interior is oriented east and west
along roads through the uplands and savannas, and in radial patterns
around the principal cities of the Azuero Peninsula itself like Santiago.
It was the environment of the interior of the Isthmus of Panama that
gave rise to the other Panama, a different society than that of the
maritime port cities.
Edward Fox in his geographic history of France distinguished coastal-riverine from interior areas of France as non-uniform environments
9. The Isthmus of Panama and the two Panamas
68
chapter four
panamanian territoriality in geographic perspective
69
that would have naturally tended to redefine the nature and spatial range
of flows of goods, people, finance, and messages.1 Like Braudel, Fox
combined his geographic observations distinguishing coastal-riverine
and interior areas of France with evidence of long-term exposure to
the growth of the capitalist world economy. Fox hypothesized that
coastal-riverine areas of France would have possessed a greater degree
of spatial and social orientation to maritime commerce than the interior territory of France. Therefore, the durable and enduring impacts
of the growth of the capitalist world economy on social organization
would not have been felt uniformly in France. Foxs hypothesis is that
a territorial-administrative and a maritime-commercial society
developed in these two different environments in France during preindustrial times, that the two societies persisted throughout French
history, and that their differences explain long term patterns in French
political divisions.
Fox used his fully-developed hypothesis of maritime-commercial
and territorial-administrative societies to explain a recurring pattern.
During unmistakable periodic regime shifts in contemporary French
politics since the 17th century, the coastal-riverine port cities of France
and the interior of France were on opposite sides. Fox explained that
one of the long-term impacts of non-uniform (i.e., geographic) orientation to long-distance maritime flows of goods, people, finances, and
messages was a French society he called the other France that had
a different institutional gamut of political negotiation and consensus
inherited from its legacy of maritime-commercial interactions with the
Mediterranean, Atlantic, Indian, and Pacific oceanic worlds. For our
purposes, the other Panama was the one that most observers have
taken for granted since it was isolated from the port cities and was neither the wealthiest nor the more politically dominant the territorialadministrative society of the Panamanian interior.
1
Edward Fox, History in geographic perspective: The other France (New York:
W. W. Norton, 1971). See also the following: Edward Fox The range of communications and the shape of social organization. Communication 5 (1980): 275287;
Edward Fox The argument: Some reinforcements and projections, in Eugene D.
Genovese and Leonard J. Hochberg, eds., Geographic perspectives in history (Bath,
England: Bookcraft Ltd., 1989), 331342; Elizabeth Fox-Genovese and Eugene D.
Genovese Social classes and class struggles in geographic perspective, in Genovese
and Hochberg (1989), 235255.
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chapter four
1. The Two Panamas
Characterizing Panamanian society as split between a maritimecommercial and a territorial-administrative society is an accurate
description that can be independently confirmed. Two leading Panamanian scholars, Omar Jan Surez and Alfredo Figueroa Navarro,
as well as an American historian specializing in colonial Panama,
Christopher Ward, describe two societies as Foxs hypothesis would
have predicted given the geographic environment of the Isthmus of
Panama.2 Jan Surez says that throughout Panamas history there
have been two more or less socially and geographically distinct societies. One society was dominated by the bourgeois of Panama City (la
burguesa de la ciudad de Panam), an urban commercial elite who
influenced the entire Isthmus of Panama from Panama City. The other
elite society was ranchers and landowners in the interior of the Isthmus who dispersed themselves among the cities and villages of the
western savannas and wielded power at regional and local scales (la
sociedad seorial, la de los grandes ganaderos del interior del pas, dispersos en los pequeos poblados de las sabanas).
Figueroa Navarro split Panamanian elite into the politically dominant commercial elite of the maritime cities, and a subordinate and
scattered landowning elite residing in the towns and on the estates of
the interior. Figueroa Navarro describes several distinguishing characteristics of the dominant commercial elite including their less colonial
frame of mind, i.e., less loyalist, an anticlerical and pro-Mason disposition, their xenofilia and free port advocacy, memberships in groups
devoted to the spread of Enlightenment ideals (Sociedades de Amigos
del Pas), and their endorsement of education in chemistry, agronomy,
2
See Omar Jan Surez, Desarraigo y migracin de poblaciones en Panam: 1950
1960, Anales de Ciencias Humanas 1 (1971), 2958. See also the following: Omar Jan
Surez, La poblacin del Istmo de Panam del Siglo XVI al Siglo XX (Panama: INAC,
1978); Omar Jan Surez, Hombres y ecologa en Panam (Panama: Smithsonian
Tropical Research Institute, 1981); Omar Jan Surez, La regin de los llanos del Chir:
Un estudio de historia rural Panamea (Panama: INAC, 1997); Omar Jan Surez, La
poblacin del istmo de Panam: Estudio de geohistoria (Madrid: Ediciones de Cultura Hispnica, 1998). See also Alfredo Figueroa Navarro, Dominio y sociedad en el
Panam Colombiana (18211903): Escrutino sociolgico (Panama: Impresora Panam,
1978); Alfredo Figueroa Navarro, Los grupos populares de la ciudad de Panam a fines
del siglo diecinueve (Panama: Impretex, 1987); Alfredo Figueroa Navarro, Testamento
y sociedad en el istmo de Panam: Siglos XVIII y XIX (Panama: Impresora Roysa,
1991). See finally Ward (1993). All translations of Figueroa Navarro, Jan Surez, and
Alba Carranza appearing in the book are by the author.
71
geology, and physics as opposed to theology and law. In contrast to

the dominant urban maritime elite, Figueroa Navarro describes the
interior landowning elite as more colonial, negative towards the influence of the outside world, Catholic, ethnically and culturally Hispanic,
i.e., of Spanish origin, and concerned with family solidarity and community stability.
The contrasting geographies of the Isthmus explain why Foxs
expectations fit historical observations in Panama. The city of Santiago de Veraguas on the Azuero Peninsula is the spoke of the most
distinguishably radial pattern of towns and villages on the Isthmus
of Panama. It is fairly easy to recognize the Azuero Peninsula. It is
the only sizeable area of the Isthmus of Panama jutting out into the
Pacific Ocean and one of the only areas where a large radial spatial
pattern of towns and villages emerged. Santiago and other cities like
Las Tablas and Penonom represent the historical core of the Isthmus of Panamas inland territorial-administrative society (see photo of
the upland savannas of the interior in Figure 10). Large ranches and
rural estates were most concentrated around Santiago and Las Tablas
wherever there happened to be significant administrative or mineral
activity.3 In poorer or further isolated parts of the western interior
such as Alanje, Santa Mara, Antn, and San Carlos interior estates
were scattered. For the majority of Panamas population in the Pacific
watersheds of the interior, at least until the turn of the 19th century,
a strong central-place hierarchy dominated interior town life.4 Interior inhabitants lived in small and relatively self-sufficient microcosms
where only the elite communicated with the rest of the country and
Panama City.
2. Fluctuations in Wealth from Interoceanic Transportation
and Migration
Braudels contribution to historical methods is particularly useful in
elaborating the significance of Edward Foxs ideas to the history of
straits in comparative perspective.5 Edward Fox speculated that after
his two societies (maritime-commercial and territorial-administrative)
Jan Surez (1978).

Jan Surez (1978, 395).
5
Fernand Braudel, History and the social sciences: the Longue Dure, in On History, Sarah Matthews, trans. (Chicago: University of Chicago Press, 1980/1958).
4
10. The upland savannas of the Panamanian interior
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73
become established, as they had in pre-industrial France, any number

of things that may or may not have anything to do with geographic
factors would allow them to persist.
Foxs hypothesis only specifies two societies engaging in travel and
transport because they occupy two different geographic environments;
it does not specify other relationships that, in many respects, could
be considered natural second derivatives of the original hypothesis.
Distinct social and spatial relationships should ebb or flow in response
to cyclic or random fluctuations in the magnitude and extent of travel
and transport. If there is a second derivative, middle duration cycle
in Foxs original hypothesis pointing to historical trends in travel
and transport activities affecting political rivalries, there may also be
a third derivative, political manipulation of different value systems
about wealth and status related to travel and transport, ultimately also
affecting political rivalries.
By insisting that there are multiple historical times, Braudel believed
that history written to encompass only a short time scale of events
would never reveal that other relevant phenomena were also part of
the unfolding story.6 The theoretical specifications of Foxs original
hypothesis focus on the persistence of socio-geographic travel and
transport relationships over the longue dure. Fox is silent on how
medium-term cyclic economic fluctuations impinge on the relationship between or comparative strength of the two societies. Nor does
Fox assess how, over the short-term, a political opposition might secure
allies from across a societal divide by deploying nationalist or socialist
rhetoric to induce racial minorities or non-elite social classes to switch
temporarily their political allegiance. Finally, Braudels longue dure of
persistent constraints on human action includes not only geographic
factors but also cultural ones. Is it possible that long after the material foundations of the clash between the maritime-commercial and
territorial administrative societies of France or even Panama were
attenuated by the communications (telegraph) and overland transport
(railroads) revolutions, the core values associated with these two societies persist and continue to cause now hidden, now overt, conflicts
between their respective elite?
Fox himself understood how implausible it might seem that two societies adapted from geographic conditions belonging to the pre-industrial
Braudel (1980/1958, 34).
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chapter four
if not the ancient past could persist as distinct and continue to influence
political rivalries in the case of French political history despite changes
in underlying French geography. The separateness Fox described
between the two societies in France has been nuanced by reemphasizing that class dynamics, though geographic in origin rather than
some non-geographic inevitable law of history, were still important
to consider when interpreting Foxs original hypothesis.7 Jan Surez
said that his own describing of two pre-industrial societies in Panama
might lead to the impression that there were two neatly separate societies, which he says there were not. The Panamanian evidence suggests
that over long periods of time there were half-century episodes when
people decided to shift back and forth between the two societies. Shifting and mixing created by direct and derived economic opportunities of the Spanish trails, the Panama Railroad, and later the Panama
Canal significantly mixed and blurred the lines between Panamas two
societies.
Wherever channels of communication existed between the two societies, and in the case of pre-industrial Panama it was only at the level
of elite families, socio-geographic migrations could occur. For the elite,
inter-societal migration was a response to the comparative economic
vitality of life on an estate in the western interior, versus life deriving commercial wealth from the transport of foreign goods or finance
across the middle of the Isthmus of Panama. The value to be derived
from the transport of foreign goods across the Isthmus was, in turn, a
function of the vitality of inter-oceanic transportation technology.
B. The Two Panamas Under the Viceroyalty of
Peru Until 1717
1. Elite Settlement and Migration Between the Interior
and the Port Cities
The first Spanish colonists who settled in the city of Old Panama on
the Pacific Ocean side were four hundred Spaniards who originally
came from Andalucia and Extremadura in southern Spain.8 Cultural
adaptations or systems of production familiar in the grasslands and
7
8
See Fox-Genovese and Genovese (1989).

Ward (1993, 32).
75
forested uplands of Andalucia and Extremadura in Spain would have

been alien in the tropical lowlands around the port cities of Panama
City, but less so in the central interior savannas of the Azuero Peninsula. Not surprisingly, the rural descendants of the original Spanish
encomenderos, as holders of conquest-era rights to an estate and indigenous labor, preferred to settle only in the open savannas.9 During
the period between 1540 and 1600 there was a rapid socio-geographic
transformation.10 The encomendero elite left the western interior of the
Isthmus of Panama and formed an upper class of urban merchants in
the port cities, with their relatives acting as middle-level government
functionaries. The impetus for the initial major shift from the interior
to the maritime cities occurred around 1545, when the Andean silver
mines of Potos in the Viceroyalty of Peru went into production and
began to produce silver bullion that had to be transported safely back
to Spain.
An elite shift to maritime-commercial activities may not have been
uncommon in Spanish America wherever indigenous population
declines and natural environments closed off opportunities for interior settlement. It was the velocity with which a maritime-commercial
shift occurred on the Isthmus of Panama that was unique. Indigenous
population collapses during the first century of European colonization
due to disease and displacement were particularly severe in Central
America and the Isthmus of Panama, but that was only part of the
explanation.11 By as early as 1607, not a single encomendero remained
on the Isthmus of Panama. Second generation Panamanians felt that
despite a stigma attached to commercial activity it was the best opportunity they had to maintain their social and economic status within an
increasingly mercantile Panama.12
2. The Two Panamas and Colonial Disputes with Both
Peru and Spain
Panamas port city elite regularly engaged in formal and informal
negotiations with commercial traders and government administrators
Jan Surez (1978, 4923).

Ward (1993, 3233).
11
Adams (1989).
12
Ward (1993, 33) said that Panama was the first among Spains colonies to move
towards maritime-commercial activities.
10
76
chapter four
to operate the businesses necessary for transporting goods, people,

finance (especially silver bullion), and messages across the Isthmus of
Panama, which constituted everyday life among Panamas maritimecommercial society. The encomenderos who left the interior during the
second half of the 16th century were the first residents of the Isthmus
who negotiated transportation across the Isthmus of Panama with
outsiders, that is, outside people who though perhaps also engaged
in maritime-commercial activities throughout the region were not
from the port cities of Panama or from one of the provinces on the
Isthmus.
The contemporary Republic of Panama (1903-date) corresponds
roughly in territorial area to the extent of the colonial Audiencia of
Panama (15381751).13 The Audiencia of Panama was originally broken into two provinces with several important cabildos or city councils. The province of Panama encompassed the area of the middle of
the Isthmus of Panama and the port cities, while the province of Veraguas encompassed much of the Azuero peninsula and the rest of the
Panamanian interior. The cabildo or city council was the primary unit
of local government and each cabildo had its own local jurisdiction
over building permits, sanitation and public health, prices and wages,
taxes, and the police.
The Audiencia of Panama, including the two provinces of Panama
and Veraguas and all the city councils, were subordinate to the jurisdiction of the Viceroyalty of Peru (15421824) until 1717, and afterwards to the Viceroyalty of New Granada (17171819) until Panamas
independence. All the viceroyalties were subordinate to the domain
of the Royal and Supreme Council of the Indies (15241834), which
though persisting as a powerful governing body over the Americas for
nearly three hundred years underwent significant changes and reforms
during the 18th century. A separate Casa de Contratacin or House
of Trade, established in 1503 in the Spanish city of Seville, had jurisdiction over commercial flows and administration of commercial law,
and exercised direct authority over all captains and vessels engaged
in transporting goods, people, and finance (including silver or gold)
between Spain and viceroyalties overseas.
13
The official date for the founding of the Audiencia of Panama is given as 1538 in
some sources and 1574 in other sources. The earlier date is listed here.
77
People of Spanish descent born in the Americas were usually prevented from holding high offices like that of a viceroy, but they were
allowed to hold cabildo appointments and were usually elected by the
citys property-holding class. Close relatives of the Panamanian maritime-commercial elite also filled middle bureaucratic positions in the
cabildo. Thus elite maritime-commercial descendents of encomenderos
who left the interior for the port cities at the end of the 16th century
became politically engaged in sustaining the family-owned businesses
that provided services for the overland transit, using the jurisdictional
authority of the cabildo or city council of Panama. These maritimecommercial descendents of encomenderos were the first to articulate
what several authors have described as the emergence of a Panamanian regional political identity, first expressed by elite merchants
who separated their common interests from those of elite merchants
or Spanish-born administrators from the Viceroyalty of Peru, the Casa
de la Contratacin in Seville, and the Royal and Supreme Council of
the Indies.14
The mule and inn industry that serviced the overland transport of
silver from Peru to Spain was the first significant source of transportderived wealth for the Panamanian maritime-commercial elite. The
Isthmus of Panama was not the only location hosting an important
mule route in colonial Spanish America. However, the Panamanian
mule roads were unique in that they were not directly connected to
any interior sources of wealth. The merchant families of the Isthmus
charged exorbitant prices relative to the other mule roads in Spanish
America because they had a monopoly and because importing and sustaining mules in Panama was expensive.15 Everything about the Panamanian mule industry was imported. All of the mules were imported
as well as all of their food. In fact, purchases of mules often exceeded
the Audiencia of Panamas yearly defense costs.16 High markups on
mule services allowed Panamanian elite to become wealthy and diversify their portfolios by purchasing real estate. Just as commercial elite
charged high markups on the mule services, they also controlled the
cabildo of Panama City and established taxes on travelers to maintain
the roadways, inns, and other transit infrastructure. The infiltration
14
See Ward (1993, 69, 7780), Jan Surez (1978, 506), and Figueroa Navarro
(1978, 8).
15
Ward (1993).
16
See Ward (1993).
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chapter four
of the local cabildo and Audiencia of Panama by the relatives of elite

maritime-commercial families was probably not uncommon in Spanish America but it was the key relationship that protected monopolistic markups on transport services and infrastructure, binding a local
Panamanian maritime-commercial society with a cluster of commercial and government services around the transportation of foreign
goods, people, finances, and messages across the Isthmus of Panama.
Many of the maritime-commercial elite in Panama intermarried
with rich Spanish and Peruvian merchant families. One author argues
that the encomendero heritage of the Isthmus of Panama had been
diluted by the immigration of wealthy peninsular Spanish or Peruvian merchants. Does intermarriage with Spanish and Peruvian merchants dilute a territorial-administrative encomendero class or does it
create a maritime-commercial society? Intermarriage among maritimecommercial elite families, common in the history of the Mediterranean
well before the colonization of the Americas, allowed a new nonencomendero maritime-commercial elite extended family to evolve
and span a social network of people in the business of transporting
mineral wealth from the Peruvian Andes to Spain.
The trust of family commercial relationships decayed when mercantile interests from Cadiz, who took over the silver transit from the
merchants of Seville after 1679, used their political influence in Spain
in order to manage newly won commercial privileges in Panama. Even
though a late 17th century breakdown in maritime-commercial relations between the merchant families of Spain in Cadiz and Panama
City should have had serious political repercussions, it is not clear that
it did, which bears explanation in the context of aspirations for political independence in the period between the Spanish trails and riverboat system (15401740) and the Panama Railroad (18491869).17
C. The Two Panamas Under the Viceroyalty of New
Granada Until Panamanian Independence in 1821
1. The Decline of the Panamanian Maritime-Commercial Elite
The Viceroyalty of New Granada was established in 1717 out of the
northern area of what was once under the domain of the Viceroyalty
17
Alex Perez-Venero, Before the five frontiers: Panama from 18211903 (New York:
AMS Press, 1978).
79
of Peru. The broken Panamanian monopoly on the royal transport of

silver between Spanish American seaports on the Pacific Ocean and
the rest of Europe, the inconsistency of commercial transits across the
Isthmus after the middle of the 17th century, and attacks by pirates
like Henry Morgan on Old Panama in 1671 pressured migrations of
Panamas maritime-commercial elite back into the western savannas
of the interior. The city of Old Panama itself was finished off by military destruction in 1740. The returning generation of Panamanian
elite, as second or third generation descendents of the original encomenderos that had abandoned life in the interior at the end of the 16th
century, came back to the interior as urban maritime-commercial elite
who then gradually became territorial-administrative elite. Families
that left the port cities and moved abroad may have been those that
after several generations of intermarriage with Peruvian and Spanish
merchants were too much a part of the cosmopolitan maritimecommercial world, and instead, looked to maintain their social and
economic status as merchant elite in other port cities throughout
Spanish America.
Urban elite maritime-commercial families who returned to the interior at the end of the 17th century adopted the ways of territorial-administrative society after a generation or two to the point where they
fell out of touch with relatives back in the maritime cities:
[T]ransplanted one or two generations, ruralized, previously urban, families lived a basically agricultural existence and did not identify themselves with their city brethren, who were devoted to mercantile matters,
despite carrying similar surnames.18
Recent elite arrivals from the maritime cities socially fortified the
savanna elite, eventually adopting the distinct mentality and lifestyle
of the western interior:
[T]hese recent arrivals [after the 1671 destruction of Old Panama City]
demographically fortified a dominant group that otherwise was condemned to mestization or extinction, and enriched the possibility for
more intense social relations. But at the same time they adopted with
ease the mentality and lifestyle [el compartamiento] of their once separate neighbors, and rapidly the economic structures of self-sufficiency.19
18
19
Figueroa Navarro (1978, 128129).

Jan Surez (1993, 497).
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chapter four
In short, the newly migrating elite from the maritime-commercial

ports to the interior quickly adapted to the institutions and norms of
the dominant group in that locale.
Opportunities to accumulate wealth and maintain status in the interior of the Isthmus of Panama were limited without mineral wealth,
a large supply of indigenous labor, or a market for foodstuffs in the
maritime cities. However, cattle ranching remained a staple of interior landowning elite livelihood in the interior savannas. Most importantly, it became the principal instrument of commercial interchange
between the colonial elite of the interior and their wealthier and more
politically influential port city relatives. Savanna ranching, landowning and bureaucratic elite engaged in cattle ranching far from the final
consumer.20 Cattle unlike other bulk foodstuffs can transport themselves overland to commercial markets, helping to explain how elite
economic exchange relationships were maintained over long distances
between the interior and the maritime cities. The fact that the landowning elite of the interior preserved an active business relationship with
the maritime elite through the exchange of cattle from the interior to
the seaports, or the through lending of money from the seaports to the
interior, explains why it would have been possible for elite families on
the Isthmus to have maintained the social connections to be able to
shift back and forth between the interior and the maritime cities.
D. The Two Panamas Under Great Colombia (18191831)
1. The Two Panamas and States Rights Disputes
with Great Colombia
Interior landowners in Spanish America controlled all sorts of rights to
land and large supplies of indigenous labor, rights stemming from the
original privileges their encomendero ancestors acquired from Spanish
monarchs after the military expeditions of the 16th century. At the end
of the 18th century, when local and regional authorities representing
the European Spanish bureaucracy claimed direct royal authority over
the interior and legally challenged conquest-era encomienda rights in the
courts, political conflict became unavoidable, eventually leading to
20
Jan Surez (1978).
81
independence. On the Isthmus of Panama, the movement of settlers

into interior farm, ranch, and mining lands did not produce a territorial-administrative political rivalry even after a long period of interior
growth and development.
For simplicitys sake, people from what is today the territory of
Colombia will be referred to as Colombians. Likewise, people
from predecessors of the modern Republic of Colombia, such as the
Republic of New Granada (18311858) or the Grenadine Confederation (18581863), will also be referred to as Colombians. However,
people from what is now the territory of the Republic of Panama
will be distinguished as Panamanians, in the regional sense, even
though historically speaking the territory of the Republic of Panama
was administered from Bogota from colonial times until 1903. The
spirit of Panamas officially declaring itself independent of Spain on 28
November 1821, and almost simultaneously declaring itself as part of
President Simon Bolivars Republic of Colombia or Great Colombia (18191831), may have been motivated by maritime-commercial
expectations of an ideal political future and commercial growth when
a classical liberal political regime would govern the Isthmus of Panama
and provide the administrative structure for foreign investment in new
interoceanic transportation technology. However, Panamanian rebellion from Spanish authority in 1821 did not result in Panamas becoming part of a classical liberal political regime.
For example, central government proposals by Simn Bolvar
were met by a series of federalist counterproposals by Panamanian representatives dated 13 September 1826, early evidence of the
semi-independent political goals of Panamas maritime-commercial
elite. The fourth article of the 1826 Panamanian federal counterproposal called for Panama to become a Hanseatic state under the protection of foreign maritime powers and for measures to turn the tide of
economic stagnation on the Isthmus of Panama by attracting foreign
investment. The terms of the proposal included declaring the entire
Isthmus of Panama a free trade zone, conceding to a foreign capitalist
company the route for a road or canal, and arranging interior establishments for economic production los establecimientos interiores de
un modo productivo in order to sustain the governments authority
but no more than was necessary to insure public order.
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E. Conclusion
An analyst armed with Foxs interpretation of the two societies who

happens to consult the historical interpretations of early Panama will
see that there have always been rival societies, a territorial-administrative society in the western interior and a maritime-commercial society
(described by some researchers as a commercial enclave) in the terminal port cities, both of which existed well before the United States
intervened in Panamanian history in 1903.
Fluctuations in the transportation of goods, people, finances, and
messages across the Isthmus of Panama compelled elite Panamanian families to migrate back and forth between the western interior
and the maritime cities. Many, but not all, elite families in Panama
shifted their socio-geographic orientations in response to at least
three major commercial cycles over the last four hundred years, the
Spanish trails (15401740), Panama Railroad Company (18491903)
and Panama Canal (1903-present), each associated with either an
ascending or declining phase in the use of interoceanic transportation
technologies.21
The existence of two Panamas and the economic impulse to migrate
between the interior and the maritime cities as a result of fluctuations
in interoceanic transportation had political implications in Panama.
The two Panamas represent a persistent sub-national social and geographic distinction between Panamas maritime-commercial society
and its territorial-administrative society, corresponding roughly to
the territorial extents of the colonial provinces of Panama and Veraguas, and geographically centered on the cities of Panama and Santiago, respectively. However, being Panamanian refers to a political
distinction that emerged first among the merchant elite of Panamas
maritime-commercial society in the colonial city of Panama, after
which it could have diffused with modification to the rest of Panamanian society in the interior or perhaps developed separately during
independence from Spain and later from Colombia.
Originally, being Panamanian meant having a regional sense of
identity that materialized out of the particular social and geographic
circumstances of former encomendero merchant elite from the city of
Panama with respect to their political interests in protecting high mark-
21
See Jan Surez (1978, 1998) and Ward (1993).
83
ups on interoceanic transportation services. The origin of Panamanian

identity among maritime-commercial elite may explain why desire for
greater autonomy or, more radically, complete independence from
Colombia during the 19th century was not supported equally at all
times by the rest of the Panamanian society in the interior like Santiago de Veraguas, at least not until the political ideals of breaking Panamas subordination to Colombia were not simply synonymous with
protecting the economic wealth of elite maritime-commercial society
in the city of Panama. In instances such as Colombias civil wars and
other major conflicts between Liberals and Conservatives during the
19th century, leaders from Panamas territorial-administrative interior
and its maritime-commercial port cities were, in fact, often on opposite sides and military forces from the Panamanian interior more than
once marched to put down insurrections against Colombian authority
in the city of Panama.
It is a matter of serious debate whether Panamas urban commercial
elite can be considered an alien enclave society supported by the
United States. Historically, the maritime-commercial elite were just as
genuinely Panamanian as their extended family relatives who lived
in the western interior, probably even more so. The urban commercial elite of the transit cities, not the elite of the western interior, were
the politically and economically dominant group throughout most of
Panamas pre-industrial history and were the most vocal advocates of
a separate Panamanian identity against Spanish, Colombian, and in
some cases American administrators. Panamas cosmopolitan maritime-commercial elite society predate the United States itself, having
developed by the end of the 16th century as a society of elite families
that at various times in their history had to shift their allegiances back
and forth between the port cities and the interior.
Though they cultivated close social and business relationships with
outsiders, including intermarriage, Panamas urban merchant class
were not a creation of American hegemony or favoritism during the
middle of the nineteenth century, thereafter to be supported by the
terms of the 1903 Hay-Bunau-Varilla Treaty. As explained below,
American activities to build and operate the Panama Canal in the
newly formed Republic of Panama after 1903 became entangled in an
evolving political rivalry between the two pre-industrial Panamanian
societies, as each sought to gain political support among non-elite by
redefining the ideals for Panamas political future.
CHAPTER FIVE
AMERICAN TERRITORIALITY IN
GEOGRAPHIC PERSPECTIVE
A. Territorial Enlargement, Political Regimes, and
Interoceanic Transportation
By 1789, the United States had achieved an improbable victory against
Britain and emerged as a populated but militarily weak confederation,
by European standards. To the east, the coast of the United States was
isolated from conflicts and intrigues in Europe by the high seas of
the Atlantic Ocean. To the west, sparsely settled United States territories were bordered by vast inland drainage basins and flanking islands
belonging to a relatively weak Spanish colonial power. As the United
States began to back its way westward into territorial enlargement over
the remainder of Spains empire, motivated to prevent territory on
United States borders from falling into the hands of a more powerful European state, an enlarged United States began to emerge as two
coasts separated by a continent.
1. American Territoriality
There has never been much debate in Congress that a territorially
enlarged United States needed a means of transportation into its
western interior for its general welfare and common defense. Likewise, there do not appear to have been any notable historical controversies about the need for an interoceanic canal somewhere in
Central America. The policy dilemma that occupied representatives of
all three branches of the federal government at one time or another
was whether the United States federal government had the constitutional authority to build and operate an interoceanic canal in a foreign territory. Should an interoceanic canal in foreign territory be a
matter for private enterprise instead? Should a consortium of foreign
maritime powers and the United States share in the construction and
operation of the canal through a divided enterprise? Should it be an
American government canal under American control for a period of
ownership in perpetuity? Finally, would a treaty be sufficient to resolve
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potential disputes between the extraterritorial powers of the United

States federal government and sovereign powers of the state adjacent
to the canal?
One of two different principles tended to be the preferred or driving force behind policymaking with respect to federal government
involvement in an interoceanic canal project. Sometimes United States
policymaking was based upon an avoidant posture that questioned the
constitutionality of the exercise of the powers of the federal government
in foreign territory, and opposed an American canal under American
control if it meant entangling alliances with foreign nations. At other
times, United States policymaking was based upon a preventive posture that advocated extraterritorial exercise of the constitutional powers of the federal government in foreign territory in order to prevent a
canal from falling into the hands of European governments. Evidence
in policy statements made by Presidents and Secretaries of State suggests that the alternation between avoidant and preventive postures
did not occur over the period of four year Presidential terms of office,
but over the period of fifty-year changes in policy regime.
2. American Policy Regimes
It is sometimes thought the political party that controls the White
House and the Senate controls American foreign policy. Notwithstanding votes on a few Congressional bills and subcommittee opinions in
the Senate Foreign Relations Committee, the most important interoceanic canal treaties introduced into Congress by the President had
to be ratified with bipartisan support. For instance, Figure 11 divides
American history from 1789 to 2009 into policy regimes and shows
that very few political parties at any time in American history held the
Presidency and a two-thirds majority in the Senate or a majority in the
House at the same time. In fact, only ten elected American presidents
including George Washington (labeled as A in Figure 11) enjoyed
at one point in their tenure a two-thirds party majority in the Senate,
which still does not guarantee ratification. Republican President Theodore Roosevelt (labeled as F) had nearly a two-thirds party majority
in the Senate in 1904 when the Senate ratified the Hay-Bunau-Varilla
Treaty. Democratic President Jimmy Carter (labeled I) had nearly a
two-thirds party majority in the Senate in 1978 during Senate ratification of the Panama Canal treaties abrogating the Hay-Bunau-Varilla
Treaty. Other dates labeled in Figure 11 correspond to major events
87
11. American policy regimes 1780sdate
american territoriality in geographic perspective
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or treaty negotiations and signings, e.g., John Quincy Adams and the
Panama Congress in 1826 (labeled C). A party majority in the Senate
does not guarantee ratification, nor does not having a party majority
in the Senate mean ratification is unlikely.
Changes in interoceanic canal policy marked by major agreements
like the 1903 Hay-Bunau-Varilla Treaty or the 1977 Panama Canal
treaties occurred as gradual momentum shifts, and correspond well
with the half-century alternations in American policy regime noticed
by the American historical geographer Carville Earle.1 In his historical
geography of the United States, Earle argued that American political
ideologies have alternated in five half-century phases between policy
regimes of republic and democracy. Five American policy regimes
of republic and democracy are used in this book as chronological
breakpoints marking a new chapter in American policy over the exercise of the powers of the federal government to control and operate
an interoceanic canal in a foreign territory. The five historical policy
regimes and approximate dates include (see Figure 11): 1) the 1st
republic (1780s1820s), also known as the Early Nationalist Period;
2) the 1st democracy (1830s1870s), including the Middle Period,
Civil War, and Reconstruction; 3) the 2nd republic (1870s1930s),
also known as the Gilded Age and the Progressive Era; 4) the 2nd
democracy (1930s1970s), the period of New Deal Liberalism; and
finally 5) the 3rd republic (1980?), the era of the Reagan Revolution
and Conservative Centrism.2
The terms republic and democracy refer to ideological similarities among a group of a dozen or so Presidents who may have led different political parties but served their terms of office within the same
fifty-year economic cycle of crisis and recovery in the United States.
According to Earle, Americans first fashioned their republican and
democratic ideologies by crossing the ideological streams of doctrinaire 17th century English liberalism and republicanism. The
terms republic and democracy do not refer to the contemporary
Republican and Democratic Parties. Nor do the terms liberal and
1
Carville Earle, The American Way: A geographical history of crisis and recovery
(Lanham, MD: Rowmann & Littlefield, 2003). For an earlier version of the argument
see also Carville Earle, Geographical inquiry and American historical problems (Stanford: Stanford University Press, 1992).
2
See Earle (2003, 27). Turning points in American historical periods are considered approximate but conform to different policy regimes.
89
republican in 17th English political thought have the same meaning

as being a liberal Democrat or a conservative Republican in modern
American political life.
Liberalism and republicanism in the context of 17th century British political life were opposing political perspectives. However, early
American political leaders were drawn to both perspectives simultaneously in their fight for independence and drafting of the Constitution. Americans wanted most of all their freedom from an oppressive
government, which led them to adopt English 17th century liberal
principles of internationalist free trade and elitism. At the same time,
Americans also wanted a powerful nation capable of defending that
freedom, which led them to adopt English 17th century principles
of republican nationalism and egalitarianism. American republics
crossed republican nationalism with liberal elitism, while American
democracies crossed liberal internationalist free trade with republican egalitarianism.
Driving half-century alternations between the American ideologies
of republic and democracy was a half-century-long sequence or
institutional repertoire of crisis and recovery from recurring fiftyyear economic crises symptomatic of the capitalist world economy
(see policy regimes and primary price troughs in 1825, 1873, 1933,
and 1987 listed in Figure 11). Hybrid political ideologies were a key
to the American way of setting aside the ideologies and policies of
a republic and supporting the policies of a democracy, and then
back again, in relatively smooth transitions that kept political life in
the United States from devolving into extreme forms of government
like fascism or communism.
Proper treatment of the history of the territorial enlargement of
the United States, the expansion of the powers of the United States
federal government, or nuances about fifty-year economic cycles and
alternating American political ideologies are outside the scope of evidence offered in this book. However, the relevance of policy regimes
to interoceanic canal policy is an important chronological feature of
the book.
3. The Assembly of American Nations at Panama
Perhaps the earliest opinions by an American President or Secretary
of State concerning interoceanic communication across the Isthmus
of Panama were in reference to the 1826 Congress or Assembly
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of American Nations at Panama. The debate between President John

Quincy Adams and Congress about the proper application of American foreign policy principles for an interoceanic canal in Panama illustrates the general controversies that would continue to arise over the
next two centuries, and can be found in a confidential message sent to
the Senate by President John Quincy Adams dated 26 December 1825
and published 21 March 1826.3
In his message to the Senate on 26 December 1825, Adams offered a
rationale favoring American participation in the Assembly of American
Nations at Panama. Adams nominated two Envoys Extraordinary and
Ministers Plenipotentiary to accept Simn Bolvars invitation to join
representatives from Great Colombia, Mexico, and Central America.
Prior to full Senate consideration of Adams request to send ministers
to Panama, the Senate Foreign Relations Committee weighed in with
its own eight-page opinion arguing its views about the proper principles of American foreign policy concerning an interoceanic canal,
stressing above all the avowed policy of avoiding entangling alliances.
The conclusion of the Senate Foreign Relations Committee was that it
was not expedient, at this time, for the United States to send any ministers to the Congress of American Nations, assembled at Panama.
One focus of the controversy between the President and the Senate
with respect to American participation in the Assembly of American
Nations at Panama was whether Latin American nations would be
openly discussing war plans against Spain in the presence of American representatives. The Senate also wondered whether the real purpose of the Congress was to maneuver the United States into an
entangling military alliance against Spain on the heels of the Monroe
Doctrine. Finally, the Senate questioned whether it was the President,
or Congress, that had the constitutional authority to nominate special
ministers to go to Panama.
The politics between President Adams and the Senate turned on
several issues. Should United States representatives attend the Assembly of American Nations at Panama? How should the United States
respond to foreign threats addressed to former colonies of Spain that
3
See American State Papers 5, Foreign Relations, Vol. 5, 19th Cong., 1st Sess., Publication No. 423, Messages and documents communicated to the Senate and House of
Representatives, and the executive proceedings of the Senate, from which the injunction
of secrecy has been removed, on the subject of the mission to the Congress at Panama,
21 March 1826 (Washington, D.C.: GPO, 1826).
91
had recently secured their independence? What were the advantages

of the route across the Isthmus of Panama for the welfare and common defense of the United States? What were the federal government
powers with respect to transportation improvement projects in foreign territory, even if such powers could be justified under the Constitutions call for securing the common defense and general welfare?
These issues persisted throughout the history of American interest in
an interoceanic canal and reflect general differences of opinion in the
United States about avoidant and preventive postures.
B. Territoriality and Territorial Enlargement
The posture of the 1st republic (1780s1820s) focused simultaneously
on avoiding entanglement in European conflicts while preventing
the expansion or interposition of European influence into American
affairs and the affairs of newly independent nations on the borders
of the United States. Both postures were intended to be vigilant and
compatible, as both originated out of the need to preserve the geographic circumstances that had given the United States a maritime and
an inland buffer zone against outside threats.
1. The Maritime Buffer Zone and the Avoidant Posture
One geographic circumstance of the United States at the beginning
of the 1st republic was being surrounded by a maritime buffer zone
of high seas separating it from the European continent (see Figure
12). Presidents adopted an avoidant posture to keep the United States
from becoming entangled in political conflicts and intrigues between
European nations. Presidents recognized the threat posed by a powerful European nations capability to project military forces over long
ocean distances. Thus they adopted the avoidant posture as a matter of self-defense. An avoidant posture meant that the United States
would avoid entangling arrangements so that conflicts and intrigues in
Europe could not find their way back to the United States.
The most famous American articulation of an avoidant posture was
President George Washingtons farewell address in 1796. At a time
when the United States was a coastal Atlantic-oriented nation with
only a few settled areas on the western side of the Appalachian Mountains, Washington recommended in his published farewell address
on 17 September 1796 that Americans avoid entangling alliances.
12. Territorial buffer zones and expansion during the 1st republic (1780s1820s)
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93
Washington stressed that the United States should not negate the
intrinsic advantages of being geographically separated from conflicts
between European nations, by making political alliances that could turn
involvement in overseas conflicts back onto the United States itself.
Still, Washington acknowledged the need for temporary defensive alliances with Europe in emergency situations. Washington wrote:
The great rule of conduct for us in regard to foreign nations is, in
extending our commercial relations, to have with them as little political
connection as possible . . . . Europe has a set of primary interests which
to us have none or a very remote relation. Hence she must be engaged
in frequent controversies, the causes of which are essentially foreign to
our concerns. Hence, therefore, it must be unwise in us to implicate
ourselves by artificial ties in the ordinary vicissitudes of her politics or
the ordinary combinations and collisions of her friendships or enmities.
Our detached and distant situation invites and enables us to pursue a
different course. Why forego the advantages of so peculiar a situation?
Why quit our own, to stand upon foreign ground? Why, by interweaving our destiny with that of any part of Europe, entangle our peace and
prosperity in the toils of European ambition, rivalship, interest, humor,
or caprice? Tis our policy to steer clear of permanent alliances with any
portion of the foreign world . . . . Taking care always to keep ourselves,
by suitable establishments, on a respectable defensive posture, we may
safely trust to temporary alliances for extraordinary emergencies.4
Washingtons avoidant posture was implemented in the United States

policy of neutrality during the war between Britain and France in 1793
via the 5 June 1794 Neutrality Act, the first among several during the
1st republic. According to the neutrality act, it was an offense to prepare arms for, or enlist in the service of, a belligerent nation from
within the territory of the United States. Similar statements to Washingtons were not uncommon. Avoidant principles had been published
by Thomas Paine in Common Sense in 1776 and restated by President
Thomas Jefferson during his inaugural address on 4 March 1801 and
in a 17 October 1803 message, in which he stated:
Separated by a wide ocean from the nations of Europe and from the
political interests which entangle them together, with productions and
wants which render our commerce and friendship useful to them and
For interpretations of original text of Washingtons speech consult A. B. Bushnell,

The Monroe Doctrine: An interpretation (Boston: Little Brown and Co., 1916), 11;
and James W. Gantenbein, ed., The evolution of our Latin American policy: A documentary record (New York: Octagon Books, 1971), 6.
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theirs to us, it can not be the interest of any to assail us, nor ours to
disturb them. We should be most unwise, indeed, were we to cast away
the singular blessings of the position in which nature has placed us, the
opportunity she has endowed us with of pursuing, at a distance from
foreign contentions, the paths of industry, peace, and happiness, of cultivating general friendship, and of bringing collisions of interest to the
umpirage of reason rather than of force.
Sometimes referred to as a policy of isolation, the American avoidant

posture did not rely passively on geographic distance. Avoidance
required aggressive action to preserve the advantages of a maritime
buffer via instruments like the 1794 Neutrality Act.
2. The Inland Buffer Zone and the Preventive Posture
Besides the Atlantic Ocean maritime buffer zone, the other fundamental geographic circumstance surrounding the early United States
was an inland buffer zone lying in the domain of a relatively weak
Spain (see Figure 12). Much of the area of Spains claims and possessions were in the vast Mississippi River watershed, including strategic
islands flanking sea lanes into the Gulf of Mexico such as the Florida
peninsula, Cuba, Puerto Rico, and other possessions in the Greater
and Lesser Antilles. Among the Pacific-draining inland territories
bordering the United States was the greater Columbia River watershed and the Pacific watershed of California. Meanwhile independent
Pacific Islander indigenous peoples ruled over strategic Pacific islands
including the Aleutians in the north Pacific, the Hawaiian Islands in
the central Pacific, and Samoa in the South Pacific.
2.1 Inland Territories Draining to the Atlantic
In the wake of constant wars and conflicts in Europe, and the disintegration and possible transfer of former Spanish colonial possessions
to other European powers, Presidents during the 1st republic adopted
avoidant and preventive postures simultaneously but never in the same
place at the same time. Presidents recognized the potential danger of
any transfer of Spains colonial possessions to a more powerful European nation, so they adopted a preventive posture whenever there was
a risk that powerful European nations would attempt to extend their
system of control and influence over Spanish possessions in or near
the borders of the United States.
The 1800 Treaty of San Ildefonso between France and Spain transferred Spains colonial territorial holdings in the greater Mississippi
95
River watershed to France under Napoleon Bonaparte. Although President Thomas Jefferson had advocated an avoidant posture when it
came to political matters across the Atlantic Ocean in Europe, in the
wake of events in Europe and the 1800 Treaty of San Ildefonso, Jefferson adopted a preventive posture to the possibility of French control
over New Orleans and the greater Mississippi River heartland. Jefferson regarded French, rather than Spanish, control over the mouth
of the Mississippi River as an enormous threat, saying on 18 April
1802 that there was on the globe one single spot, the possessor of
which is our natural and habitual enemy. It is New Orleans. If France
were to take possession of New Orleans, Jefferson felt that the United
States would be forced to turn all its attention to its maritime forces,
including a possible military alliance with the worlds most powerful
maritime force, the British fleet.5 By negotiating the enormous Louisiana Purchase in 1803, which essentially corresponded to the western
reaches of the Mississippi River drainage basin, Jefferson eliminated
the possibility that other than Florida any former colonial possession of Spain in the Atlantic-draining inland of North America could
fall into the hands of a more powerful European nation.
In January 1811, President James Madison reiterated the preventive American posture over former colonies of Spain on the borders
of the United States, affirmed by a formal resolution of Congress on
3 March 1811, stating that the United States could not see any part
of a neighboring territory, in which they have, in different respects, so
deep and so just a concern, pass from the hands of Spain into those of
any other foreign power.6 The issue of the remaining Atlantic-draining
possessions of Spain on the borders of the United States, not including
Caribbean islands, was resolved in 1821 when President James Monroe purchased the western and eastern portions of Florida from Spain
plus other areas when the 1819 Adams-Ons Treaty (Transcontinental
Treaty) entered into force establishing the new border between the
United States and Spanish possessions.
Bushnell (1916). See also Roger Adams, Strategy, diplomacy, and isthmian canal
security, 18801917 (Unpublished Ph.D. dissertation, Florida State University, 1974),
10 n.20.
6
Bushnell (1916, 27).
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2.2 Inland Territories Draining to the Pacific

Between 1800 and until 1821, when the disintegrating territorial holdings of Spain threatened to fall into the hands of a powerful France or
even an independent Native American sovereign nation under British protection, Presidents Thomas Jefferson and James Madison advocated a preventative posture. The Louisiana Purchase of 1803, the War
of 1812 with Britain, and the Florida Purchase in 1821 resolved the
question of which power would exercise control over the greater Mississippi River drainage basin and its Caribbean Sea and Gulf of Mexico
approaches. American Presidents during the 1st republic seemed satisfied that offshore flanking islands like Cuba would remain as colonial
possessions of Spain and would not be transferred to a more powerful
European nation.
The limits of the vast geographic and political world of the Atlantic
Ocean in North America can be defined by any lands draining to the
Atlantic Ocean or the Gulf of Mexico, and include the Atlantic coast
and greater Mississippi River watershed. The North American continental divide marks the physiographic boundary of a separate geographic and political world in North America potentially oriented to
the Pacific Ocean. Between 1803 and 1846, the greater Columbia River
watershed and any other lands in the Pacific world that drained to
the Pacific Ocean emerged as a new theater for American preventive
posturing over adjacent land areas belonging to Spain.
The situation in the greater Columbia River basin provided the context for President James Monroe to articulate the most famous policy
with respect to Spanish possessions on the borders of or flanking the
coast of the United States. To set the background for Monroes message in 1823, in 1790 Spain reasserted claims over all territory of the
Pacific world, the swath of land extending inland from the Pacific
coastline to the continental divide all the way to latitude 61 N on
Prince William Sound along the Alaskan coast. Between 1792 and
1811, the United States made its own claims over a section of the
Pacific world between latitude 41 N and latitude 54 N by reason
of discovery, exploration, and settlement. The United States and Britain signed the Anglo-American Convention of 1818, in which they
agreed to joint jurisdiction over the territory of Oregon Country from
latitude 42 N to latitude 54 40 N. In 1819, while Spain was still militarily engaged against forces in the Mexican War for Independence
(18101821), the United States and Spain signed the 1819 AdamsOns Treaty to resolve the border between the United States claims
97
and Spanish possessions in the west. The two countries agreed that
the boundary between United States claims and Spains territory in the
Pacific world west of the continental divide would be latitude 42 N,
the modern boundary between Oregon and California.
In 1821, Russia made claims over the Pacific world that overlapped
the northern part of United States claims, extending as far south as latitude 51 N. Czar Alexander even made an incredible pronouncement
on 7 September 1821 that exclusive rights of commerce belonged to
Russian subjects from Alaska to Oregon Country at latitude N 45 50,
near the mouth of the Columbia River in Oregon, and would deny by
threat of force the commercial rights of any other nations citizens in
the area.7 Between 1823 and 1826, Britain made claims over the Pacific
world from latitude 38 N near San Francisco Bay to latitude 59 N
in the Alaska panhandle, effecting overlapping the claims of both Russia and the United States.
President James Monroe like earlier Presidents recognized the unacceptable threat posed by Spanish possessions falling into the domain
of a more powerful European state. Thomas Jefferson sent a letter to
Monroe dated 24 October 1823 reiterating that our first and fundamental maxim should be, never to entangle ourselves in the broils
of Europe . . . Our second, never to suffer Europe to intermeddle with
cis-Atlantic affairs. With significant input from his Secretary of State
John Quincy Adams, prompting by former President Jefferson, and
the encouragement of representatives of the worlds foremost naval
power in Britain who suggested a joint statement of preventive policy
to deter Russia, Monroe presented a unilateral formulation of preventive policy in an annual message to Congress on 2 December 1823.
In his message to Congress on 2 December 1823, Monroe pointed
out that it was not the current existence but the potential extension of
a European imperial system of government that represented a direct
threat to the borders of the United States. Generalizing to any portion of this hemisphere gave a certain emphasis to a preventive posture that nonetheless arose out of a situation affecting former Spanish
territories directly adjacent to boundaries of the United States. Monroe said:
7
See Butler (1978) for Russian pronouncements made at the same time applying
to activities along the Northeast Passage.
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At the proposal of the Russian Imperial Government, made through the
minister of the Emperor residing here, a full power and instructions have
been transmitted to the minister of the United States at St. Petersburg,
to arrange, by amicable negotiation, the respective rights and interests
of the two nations on the northwest coast of this continent. A similar
proposal has been made by His Imperial Majesty to the Government of
Great Britain . . . . In the discussions to which this interest has given rise,
and in the arrangements by which this interest has given rise, and in
the arrangements by which they may terminate, the occasion has been
judged proper for asserting as a principle in which the rights and interests of the United States are involved, that the American continents, by
the free and independent condition which they have assumed and maintain, are henceforth not to be considered as subjects for future colonization by any European powers . . . . We owe it, therefore, to candor, and
to the amicable relations existing between the United States and those
powers, to declare that we should consider any attempt on their part to
extend their system to any portion of this hemisphere as dangerous to
our peace and safety. With the existing colonies or dependencies of any
European power we have not interfered and shall not interfere. But with
the governments who have declared their independence and maintained
it, and whose independence we have, on great consideration and on just
principles, acknowledged, we could not view any interposition for the
purpose of oppressing them, or controlling in any other manner their
destiny, by any European power, in any other light than as the manifestation of an unfriendly disposition toward the United States.8
Monroes policy was a more refined and elaborated preventive posture

than that advocated by earlier Presidents of the 1st republic like Jefferson and Madison, who were content with a buffer zone of Spanish colonial territory on the borders or flanking the coastline of the
United States. Prevention had only sought to deter a more powerful
European nation like France from seizing Spains territorial holdings
in Louisiana and Florida.
As a refined statement of the American preventive posture, Monroe continued the policy of preventing former or newly independent
Spanish territories from falling into the hands of more powerful European states. Monroe had felt that Russia, part of the idealistic Holy
Alliance, was a verifiable threat if not deterred.9 However, Monroe
significantly enhanced the scope of the American preventive posture
both geographically and politically. First, Monroe did not specifically
8
Cited in Gantenbein (1971, 323324) and Bushnell (1916, 66).

See U.S. Congress, House, 46th Cong., 3rd Sess., Report No. 224, Interoceanic
canal and the Monroe Doctrine, 14 February 1881 (Washington, D.C.: GPO, 1881), 4.
9
99
confine his geographic focus to current or former inland possessions

of Spain adjacent to the borders of the United States or flanking it
coastline, as other Presidents had. Instead, Monroe expanded the geographic scope to the American continents and any portion of this
hemisphere, saying that the situation affecting the greater Columbia
River was merely the occasion for asserting an ideal principle. Second
and more importantly, Monroe made it policy to deter not only the
extension of a European system of government over Latin American
nations, whose independence Spain had not officially recognized,
but also any political interposition of European governments into
the political affairs of independent Latin American nations for the
purpose of oppressing them, or controlling in any other manner their
destiny.
3. Latin American Governments and the Preventive Posture
Before Monroe, the Presidents of the 1st republic adopted either an
avoidant or preventive posture depending on the adjacency of the
situation to the borders of the United States. An avoidant posture
was applied with respect to conflicts and intrigues among European
nations across the Atlantic Ocean. A preventive posture was applied
with respect to the inland possessions of Spain on the borders of the
United States.
Monroes December 1823 message to Congress expressed a preventive posture in more ideal terms with respect to any independent
Latin American nations regardless of whether or not they were directly
adjacent to or flanking the coastline of the United States. However, in
practice it was not certain during the 1st republic whether the United
States should be content that islands like Cuba and Puerto Rico remain
with Spain and never fall into the hands of a more powerful European
nation, or whether the United States should annex Caribbean islands
to ensure that they never fell into European hands.
For the United States, an independent Latin American nation was
a safer arrangement than a colonial territory under the domain of
Spain, so long as recognizing their independence did not result in
war with a European state. John Quincy Adams, despite a pivotal role
in Monroes message to Congress, adopted an avoidant posture with
respect to military support for a Latin American nation fighting for its
independence. Like a premonition of United States support for Panamanian independence from Colombia in November 1903, Secretary
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of State John Quincy Adams said during a Fourth of July speech in

1821 that if the United States involved itself in foreign conflicts, even
supporting democratic independence movements among the former
colonies of Spain, it could drag Americans to a moral low ground in
their foreign affairs: 10
[The United States] knows well that by once enlisting under other banners than her own, were they even the banners of foreign independence,
she would involve herself beyond the power of extrication, in all the wars
of interest and intrigue, of individual avarice, envy, and ambition, which
assume the colors and usurp the standard of freedom. The fundamental
maxims of her policy would insensibly change from liberty to force . . . .
She might become the dictratess of the world. She would no longer be
the ruler of her own spirit.
During debate within Monroes Cabinet just days before Monroe read
his message to Congress on 21 November 1823, Adams reflected on
the unfortunate situation that the United States may have entangled
itself in by recognizing the independence of Latin American nations,
given the alleged intentions of the Holy Alliance in Europe to reestablish European royal rule in the former colonies of Spain by force:
I said if the Holy Alliance really intended to restore by force the Colonies
of Spain to her dominion, it was questionable to me whether we had not,
after all, been over-hasty in acknowledging the South American independence. It had pledged us now to take ground which we had not felt at all
bound to take five years ago . . . . If they intend now to interpose by force,
we shall have as much as we can do to prevent them, without going to
bid them defiance in the heart of Europe . . . earnest remonstrance against
the interference of the European powers by force with South America,
but to disclaim all interference on our part with Europe; to make an
American cause, and adhere inflexibly to that.
Then in the same year in 1823, Adams said that the United States
should consider annexing Cuba due to its commanding position with
reference to the Gulf of Mexico and the West India seas, referred to
at the time as the Gibraltar of America.11 Adams was neither hypocritical in terms of his political ideals nor was he contradicting himself.
Adams was merely adopting an avoidant posture with respect to the
possibility that supporting foreign independence movements in Latin
10
Walter LaFeber, The American age: United States foreign policy at home and
abroad since 1750 (New York: W. W. Norton & Company, 1989), 80.
11
Adams (1974, 10 n. 20).
101
America or overseas could entangle the United States in foreign wars,

and adopting a preventive posture with respect to territorial possessions of Spain directly flanking the coast of the United States that could
potentially fall into the hands of a more powerful European state.
Adams conundrum as Secretary of State about the proper balance
between a preventive and avoidant posture came to a head in 1825
when Adams became President and the United States was invited to
attend the Congress or Assembly of American Nations at Panama.
Part of a newly independent Great Colombia after 1821, Panama was
far from the borders of the United States. There were also serious concerns in the Senate about whether, in exchange for rights to an interoceanic canal, newly independent Latin American nations would seek
an entangling military alliance with the United States against Spain,
which had still refused to recognize the independence of its former
colonial possessions.
Encouraged by the idealism of Monroes December 1823 message
to Congress, Presidents of later policy regimes would make the case
that an interoceanic canal was virtually a part of the coastline of the
United States and justified taking a preventive posture with respect to
any form of European interposition into the affairs of Panama. It did
not matter that Panama was far from the boundaries of the United
States. It did not matter whether European interposition into the affairs
of independent Latin American nations was for the purpose of control
over territory, or control over flows through territory in transit via an
interoceanic canal. It did not even matter whether it was a powerful
European government or a European private enterprise, susceptible to
the control of European governments.
C. Conclusion
Presidents over the next two centuries would turn to the 1st republic
model of simultaneous avoidant and preventive policy principles for
their own interoceanic canal policies. For example, Presidents, Secretaries of State, members of Congress, and other key representatives of
the United States would use certain words and turns of phrase such
as entangling alliances and foreign intrigues, or Monroe doctrine and European system, suggesting whether they were taking an
avoidant or preventive posture. However, the two postures worked at
cross purposes when it came to use of the constitutional powers of the
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federal government to control and operate an interoceanic transportation in foreign territory. An avoidant posture led to policies designed
to avoid entangling alliances with foreign entities in exchange for
exclusive American control over a canal. On other hand, a preventive
posture led to policies designed to deter foreign entities from threatening American canal interests.
What were the consequences of failing to prevent European control and influence over territories directly adjacent to the borders of
the United States? What were the consequences of failing to avoid
entangling alliances with European nations far from the borders of
the United States? Either an avoidant or a preventive posture could
be adopted when it came to American policy about an interoceanic
canal. An important factor in that preference was American political
ideology. In any given policy regime over a roughly fifty year cycle, a
specific posture with respect to the use of the powers of the United
States federal government over an interoceanic canal through foreign
territory held sway except when other factors overrode the prevailing
ideology.
CHAPTER SIX
THE EXPANSION OF THE POWERS OF THE FEDERAL

GOVERNMENT OVER INLAND TRANSPORTATION
FROM THE 1780S TO THE 1880S
A. Introduction
The territorial enlargement and consolidation of the United States, and
the expansion of the powers of the federal government over wagon
roads, canals, and railroads during the 1st republic (1780s1820s) and
1st democracy (1830s1870s), are not a separate and irrelevant history
to that of the Panama Canal. Enlargement and expansion created the
need for the Panama Canal as well as the legal basis for its creation.
At the end of the 1st republic, territorial consolidation through
transportation improvement projects was focused on connecting
nodes and links in three separate Atlantic-oriented drainage basins
that made up the United States but which had no natural water connection between them (see Figure 13), including the Atlantic coastal
watershed east of the Appalachians (labeled I), the Great Lakes
coastal watershed (labeled II), and the greater Mississippi River basin
(labeled III).1 For instance, the Erie Canal (labeled 1) was built to
connect New York City (A) and the Hudson River in the Atlantic
coastal watershed with Lake Erie and inland waterway port cities like
1
Sources for Figure 13 assembled from various GIS data. The county boundaries represent the United States in 1790. The white rivers represent the contemporary
navigable portions of United States inland waterways, and the white nodes represent
ports and other inland waterway nodes. The dark territorial area represents the United
States in 1789. The lighter grey territorial area represents territories added to the
United States to 1829. The dashed lines are general locations of overland wagon roads,
and the source for the Cumberland or National Road was adapted from the modern route of US Route 40, which closely followed the old road. Labeled features are
major watersheds including I, Atlantic coastal watershed; II, Great Lakes watershed;
III, Mississippi River watershed; physical features including 1) Erie Canal; 2) Great
Lakes (Lake Ontario); 3) Cumberland or National Road; 4) Ohio River; 5) Illinois
River; 6) Mississippi River; 7) Arkansas River; 8) Missouri River, 9) Columbia River,
and 10) Sacramento River; and cities including A) New York City; B) Pittsburgh;
C) Louisville; D) Chicago; E) New Orleans; F) St. Louis; G) Minneapolis; H) Kansas
City; and I) Omaha.
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Detroit and Chicago (D) in the Great Lakes coastal watershed. The
Cumberland or National Road (3) was built to connect Washington,
D.C. and the Potomac River in the Atlantic coastal watershed and parallel the Ohio River (4) in the eastern half of the greater Mississippi
River drainage basin.
At the beginning of the 1st democracy, given territorial enlargements over other major drainage basins including the Columbia River
basin (labeled IV in Figure 13) in Oregon Territory and the Pacific
coastal watershed of California (V), territorial consolidation through
transportation improvement projects was focused on connecting nodes
and links not only among the United States Atlantic-oriented drainage basins but between major drainage basins oriented to the Atlantic
and others oriented to the Pacific, with no natural water connection
between them. The transcontinental railroads were built to connect
inland waterway ports like St. Louis (F) and Minneapolis (G) in
the Atlantic-oriented Mississippi River drainage basin and Chicago in
the Atlantic-oriented Great Lakes drainage basin, across a vast interior
to coastal ports like San Francisco and Seattle in the Pacific-oriented
California coastal watershed and Columbia River basin.
There were two important differences between the within-Atlantic
transportation improvement projects and the Atlantic-Pacific transportation improvement projects. One difference was that railroad projects
replaced canal and road projects after 1850. Another difference was
that after the 1860s the United States federal government exercised
its authority over transcontinental railroad franchises, including the
territorial buffers of public lands around the line of the railroads themselves, to the exclusion of the sovereign powers of the States. In 1888,
the State of California took its dispute with the United States federal
government to the Supreme Court over its sovereign right to tax the
Central Pacific Railroad Company. The Supreme Court decided against
the State of California and argued that the federal governments constitutional jurisdiction over the Central Pacific Railroad Company, a
public franchise granted by Congress and not by the States, therefore
excluded the jurisdiction of the State.
By virtue of the 1888 Supreme Court decision, it was determined
that the United States federal government exercised exclusive jurisdiction in a five-mile wide (later expanded) buffer zone around the line
of the transcontinental railroads, to the exclusion of the powers of the
sovereign States through which the railroad passed. Citing this same
1888 Supreme Court case, Secretary of State John Hay would argue two
13. Territorial consolidation and transportation improvements during the 1st republic (1780s1820s)
the expansion of the federal government transportation 105
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things in his diplomatic exchanges with Panamanian representatives in

the summer of 1904. One was that the powers of the United States in the
Canal Zone derived from the Constitution, not from a transfer of Panamanian sovereignty to the United States from the Republic of Panama.
Secondly, Hay said that the federal government could extend its powers and authority which were originally intended for transportation
improvements to connect Atlantic and Pacific territories of the United
States to the Panama Canal and the five-mile wide Canal Zone in
Panamanian territory because consent was given by Panama as part of
the promises exchanged in the 1903 Hay-Bunau-Varilla Treaty.
B. Expansion of the Powers of the Federal Government
Over Transportation During the 1st republic (1780s1820s)
1. Wagon Roads and Canals to Connect the Atlantic Coastal
Watershed with the Greater Mississippi River Watershed
In 1800, at the beginning of the 1st republic, stagecoach service for
flows of passengers and freight west from New York City inland from
the coast was limited to a radius extending as far as Boston MA, Bennington VT, and Albany NY to the north; Richmond VA to the south;
and the Appalachian Mountains to the west. Travel into the far interior
of the United States beyond the Appalachian Mountains in the Mississippi River drainage basin relied on the use of navigable stretches
of inland waterways like the Ohio River but would still require weeks.
For example, from New York it took 10 days to travel by horse over
the Appalachian Mountains to Pittsburgh PA (labeled as B in Figure 13) at the confluence of the Ohio River. It then took another 20 to
25 days to travel down the Ohio River before reaching the navigational
barrier represented by the Falls of the Ohio in Louisville KY (C in
Figure 13). It would then take another 28 to 30 days traveling on the
Ohio River west from Louisville before reaching Cairo IL at the confluence of the Ohio River and the Mississippi River. Thus the total
travel time from New York NY to Cairo IL on the inland waterway
system was between 58 and 65 days. By sea, one could sail from New
York City and reach Charleston SC in 10 days.2 The trip from New
2
Charles O. Paullin, Atlas of the historical geography of the United States (New
York: Carnegie Institution of Washington and the American Geographical Society

York to New Orleans (E in Figure 13) required a minimum of 26 to
28 days sailing time.
As a result of the Louisiana Purchase in 1803 the overwhelming
majority of the area of the United States was no longer coastal, i.e.,
lying in a watershed draining directly to the coast, but fluvial, i.e.,
lying in a watershed draining to a river, which then drained to the
Gulf of Mexico or the Great Lakes and then to the Atlantic Ocean. By
1830, reaching the Mississippi River either overland from New York
by way of the Ohio River, or by sea to New Orleans, took less than 14
days.3 The improvement in sea travel time between New York and New
Orleans from 28 days to 14 days was due to the efficiency of steamship navigation over sail. However, the remarkable improvement in
travel time between New York and Cairo IL from 65 days to 14 days
was due to improvements in roads as well as canals and inland rivers
as the United States consolidated its territories and built connections
between its three major Atlantic-draining watersheds.
The first federal public land grant act by Congress to improve a river
or construct a wagon road was on 30 April 1802, entitled An act to
enable the people of the eastern division of the territory northwest of
the river Ohio to form a constitution and a State government, and for
the admission of such State into the Union on an equal footing with the
original States, and for other purposes. As a condition of its formation
as the new State of Ohio, part of the proceeds of the public lands granted
to Ohio were to be applied to mark out and construct public roads to
the banks of the Ohio River. One of those public roads, the Cumberland
or National Road (3 in Figure 13), was financed through the sale of
public lands, approved by an additional act of Congress on 20 March
1806. The Cumberland Road was constructed by the Army Corps of
Engineers and began at the banks of the Potomac River in Cumberland
MD in 1811, crossing the Appalachian Mountains to Wheeling WV and
then on to the banks of the Ohio River by 1818. Congress approved
extensions to the 1806 act and continued construction of the Cumberland Road, roughly parallel to the course of the Ohio River. Funding for
of New York, 1932), used several historical sources and empirical data on travel and
inland commerce to map rates of travel in 1800, 1830, 1857, and 1930 from New
York to selected cities then extrapolates to other parts of the United States based on
comparable rates of travel.
3
Paullin (1932).
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the road was eventually halted after reaching Vandalia IL in 1839, when
Congress voted to instead fund railroads.
In 1808, the New York State Legislature approved a grant to survey a route for a canal linking the Hudson River directly with Lake
Erie, as an alternative to a longer route to mouth of the St. Lawrence River. The Erie Canal (1 in Figure 13), an artificial river,
would take advantage of the naturally low topographic relief of the
Mohawk Valley between the Catskill and Adirondack Mountains
and also use the adjacent Mohawk River for its water supply. Congress authorized funding in 1812 for the estimated $5 million project ($78.1 million 2007 dollars) but delayed because of the War of
1812 with Britain. In 1817, Congress passed an act to finance construction of a canal between the Hudson River and Lake Erie called
the Bonus Bill. The Bonus Bill was to have provided the State of
New York with a partial $1.5 million ($23.4 million 2007 dollars)
from the federal treasury but the bill was vetoed 3 March 1817 by
President James Madison. Even though he had supported federal
aid for internal improvements in the case of the Cumberland or
National Road, Madison objected to the Bonus Bill on the grounds
that it was an unconstitutional extension of power by the federal
government over matters too broadly defined in terms of common
defense and general welfare, believing that such powers ought to
remain exclusively with the States. The New York State Legislature
itself approved financing for the Erie Canal using state funds and
the first transits between Lake Erie and New York City began in
October 1825.
An act of Congress approved 26 May 1824 granting land to the
State of Indiana for a canal included a provision for a 90 foot right
of way on either side of the line of the canal itself. On 2 March 1827
acts were passed to build canals that would connect navigable rivers
in the States of Indiana and Illinois, i.e., the greater Mississippi River
drainage basin, with Lake Michigan and the Great Lakes drainage
basin. Land five miles (sections) in width was allotted on either side
of the line of the canal to aid with construction. Alternate sections
were reserved to the federal government. Although roads and canals
were marked out under the authority of Congress, they still required
the consent of the States through which they passed. As soon as the
canal lines were fixed and land selections made, the States then had
the power to sell the land. Canals were to remain public highways for
the use of the Government, free from toll or other charge whatever;

were to be commenced in five years, and completed in twenty years,
or the States were bound to pay to the United States the amount of
any lands previously sold.4
C. Expansion of the Powers of the Federal Government
Over Transportation During the 1st democracy
(1830s1870s)
During the period 1803 to 1852, there were at least 27 American
explorations to determine the potential navigable extent of the greater
Mississippi River to the west. The most notable was that of Captain
Meriwether Lewis and Lieutenant William Clark between 1804 and
1806. Many of the 27 explorations of the West were sponsored by the
federal government to discover if an interoceanic portage was possible between the Atlantic-draining headwaters of the Missouri River
and the Pacific-draining headwaters of the Columbia River. Between
1792 and 1811, United States representatives made specific claims to
territories and former possessions of Spain on the Pacific coast by
reason of discovery, exploration, and settlement. United States claims
extended as far north as 51 N encompassing much of the Fraser River
portion of the greater Columbia River watershed, and as far south as
41 N to the present boundary of the State of California. In 1818, the
United States claimed territory that overlapped with the claims of Britain in the greater Columbia River basin, and between 1818 and 1846
while negotiations between United States and British representatives
were still ongoing, both sides agreed to joint jurisdiction over Oregon
Country until the treaty of 15 June 1846 that settled the boundary line
at 49 N and the middle of the Strait of Juan de Fuca.
The United States during the 1st democracy continued to consolidate its territorial gains in the greater Mississippi River drainage basin
and the Great Lakes drainage basin. After the 1846 Oregon Treaty
with Britain and the 1848 Treaty of Guadalupe Hidalgo with Mexico,
the United States was also faced with consolidating territorial gains in
the Columbia River basin, the Pacific coastal watershed of California,
U.S. Congress, House, 45th Cong., 2nd Sess., Executive Document No. 73, Report
of the Lands of the Arid Region of the United States with a More Detailed Account of
the Lands of Utah, with Maps by J. W. Powell (Washington D.C.: Government Printing Office, 1878), 166.
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and interior drainage basins in the West around Salt Lake City. Figure 14 (in comparison with Figure 13) shows the territorial gains of
the United States across the continental divide during the 1st democracy and the county boundaries of the United States in the year 1830.
Figure 14 also shows a contemporary picture of the transcontinental
railroad system that connects inland waterway cities within the Mississippi River drainage basin and the Great Lakes to Pacific inland
waterway and coastal cities.
The Constitution gave Congress the power to regulate commerce
between the States, powers by which it made public land grants for
the construction of wagon roads and canals to connect the interior
navigable rivers and lakes with the Atlantic and ultimately the Pacific
coasts. The accepted procedure in Congress was to grant public lands
for constructing wagon roads, canals, or railroads to the State or Territory within which that public land lay. It was then up to the State
or Territory to take responsibility for assigning public lands to a road,
canal, or railroad enterprise.
For instance, the first public land grant by Congress to a State or
Territory for a completed railroad was on 3 March 1835 to the Territory of Florida. The corporation was given a right of way through
public lands composed of a 30 foot buffer on either side of the proposed railroad line plus additional land where the railroad ended.
More grants by Congress to the State of Louisiana followed, including
a grant of public lands to the New Orleans and Nashville Railroad
Company on 2 July 1836 that specified an 80 foot buffer on either side
of the railroad line as well as additional lands for depots, wateringplaces, and workshops along the route. Other notable federal government public land grants in the greater Mississippi River basin were
made on 8 August 1846 to improve the navigation of the Des Moines
River in the Territory of Iowa and the Fox and Wisconsin Rivers in
the Territory of Wisconsin, in order to unite them to other navigable
water bodies. Alternate sections of public lands were granted within a
strip of territory five miles on either side of the river to fund internal
improvements.
Always a default statement as part of the conditions of the grant, it
was declared that the river should forever remain a public highway
for the use of the Government, free from toll or other charge whatever;
and provided that the Territory or State should not dispose of the
lands at a price less than the minimum price of public lands. One of
the facts about the Wisconsin grant approved on 8 August 1846 was
14. Territorial consolidation and transportation improvements during the 1st democracy (1830s1870s)
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that only two days before, Congress had approved the admission of
Wisconsin as a State.
1. A Transcontinental Canal to Connect Atlantic-Draining
Watersheds With Pacific-Draining Watersheds
One interesting but impractical all-water transcontinental route that
posed as a competitor to an interoceanic canal through Central America was a series of river improvements from the port of New Orleans
up the Mississippi and Missouri Rivers to the Columbia River and the
port of Astoria on the Oregon coast. On 4 March 1840, citizens from
the State of Indiana signed a petition to Congress subtitled The occupation and settlement of the Oregon Territory, and the construction of
a road thereto; and remonstrating against the construction of the proposed ship-canal across the Isthmus of Darien.5 In their petition, the
citizens of Indiana expressed their concerns over the fact that American
vessels trading in the Pacific Ocean and the Indian Ocean were exposed
to great risk, expense, and natural dangers by having to sail around
South America and around Africa, and also pointed out the political
threats to American vessels from the maritime powers of Europe.
The petition asked the federal government to support an American
canal wholly within the territory of the United States. The project would
connect the Oregon river (Columbia River) to the head of navigation
of the rivers of the West (Missouri and Mississippi) through grants of
public lands by Congress within five or ten miles of the navigable
branch of the Oregon river and the portage road thereto. The public
land grants would contain special incentives and provisions of land for
the mechanics and professional men whose labor would be required.
Government agents would sign treaties of peace, amity, and commerce
with Indian nations in Oregon Country and purchase land if necessary. Surveys of the Arkansas and Missouri Rivers would be required
in order to locate and remove as many obstructions to navigation as
possible. As for the news about recent petitions by other American
citizens for action by the United States federal government to construct a ship-canal or other technology across the Isthmus of Panama
U.S. Congress, Senate, 26th Cong., 1st Sess., Senate Document No. 244, The occupation and settlement of the Oregon Territory, and the construction of a road thereto;
and remonstrating against the construction of the proposed ship-canal across the Isthmus of Darien, 4 March 1840 (Washington D.C.: Government Printing Office, 1840).

(Darien), the citizens of the State of Indiana officially protested against
it saying that though potential use of federal government funds might
not be impractical in Panama, such a work, being out of the limits of
the United States, cannot be considered a safe investment of the peoples money, if constitutional . . . so long as our own inland resources
of trade remain untried and unexhausted.
2. Transcontinental Railroads to Connect Atlantic-Draining
Watersheds With Pacific-Draining Watersheds
The period 1850 to 1871 is generally considered the era of federal public land grants for railroads rather than for wagon roads and canals.6
Although land grants for canals became less numerous and important than grants for railroads, between 1863 and 1869 there were still
land grants made to the States of Wisconsin, Michigan, and Oregon
for military wagon roads. A total of eight wagon road grants were
administered in the same Congressional procedure as had always
been followed, giving public lands in trust to the States who would
then take responsibility for transferring the public land to private
corporations.7
A different system of public land grants to railroads began 20 September 1850 with a grant to the State of Illinois, a system that differed
very little until 1878. The terms of the grant included specific areas of
land six sections (miles) in width on either side of the proposed line
with stipulations of forfeiture in case of default. The terms of the grant
also included an indemnity area extending fifteen miles on either
side of the proposed rail line. Finally, public land grants provided that
mail would be transported at prices Congress would direct. Nearly
identical grants as that made to the State of Illinois in 1850 were made
10 June 1852 to the State of Missouri, 9 February 1853 to Arkansas,
and 1856 to the States of Iowa, Florida, Alabama, Louisiana, Michigan,
Wisconsin, and Mississippi. In some cases land was granted as the railroad progressed and it was left to the States to determine whether the
land should be forfeited by the railroad for lack of progress. However,
6
Paullin (1932) counts 64 public land grants for railroads between 1850 and 1871,
and 13 public land grants for wagon roads between 1823 and 1869 mostly in Michigan
and Oregon.
7
Department of Commerce and Labor, Bureau of Corporations, The Lumber Industry, Part 1, Standing Timber (Washington D.C.: Government Printing Office, 1913).
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as late as 1862 there were still about 20 railroads that though uncompleted still exercised their use of public lands, a situation that eventually required a ruling by the Supreme Court.
Interest by Congress to build a transcontinental railroad had begun
as early as 1842, and interest peaked again in 1845 with respect to
connecting Lake Erie by rail with the Pacific coast. By 1862, the War
Department had completed a number of surveys and explorations of
the American West to determine the most practicable transcontinental
route, which included the five routes currently followed by the Northern Pacific, Union Pacific, Denver and Rio Grande, Santa Fe, and
Southern Pacific Railroads. However, public land grants directly from
Congress to private enterprises were considered an unconstitutional
invasion of States rights. In order to continue the Congressional procedure of public land grants to the States it required, firstly, organizing Territorial and ultimately State governments in the sparsely settled
western interior.
An act of Congress approved 1 July 1862 set a new precedent. A
corporation named the Union Pacific Railroad Company was granted
a public franchise directly by Congress. In other words, the grant was
made directly from the federal government to a corporation and not
to a State to be held in trust and then administered. The 1862 grant
was not limited to any particular State but was transcontinental in
character from the Missouri River to the Pacific Ocean. The grant was
for a buffer of territory five miles on either side of the proposed rail
line from the banks of the Missouri River to the Pacific Ocean, as
well as other necessary land for rail and telegraph stations, terminals,
warehouses, and workshops. By an act 2 July 1864, the buffer around
the rail line was increased from five to ten sections (miles), increasing
the total land grant from ten to twenty miles wide. The new procedure
required only that the company file a map for a general or proposed
route before the line was definitely located. Upon the filing of the map
to the Secretary of the Interior, lands were officially withdrawn for use
by the railroad. A standard clause was inserted into every grant, And
the said road shall remain a public highway for the use of the Government, free from toll or other charge upon the transportation of troops
or other property of the United States.8 This clause applied to use of
the railroad line by government rail cars carrying government prop-
U.S. Congress (1878, 180).

erty or troops, not in terms of government property or troops being
transported in the companys rail cars at the companys expense.
After the 1 July 1862 Union Pacific grant, the same procedure was
followed to make public land grants to other transcontinental railroads
to the north and to the south. A grant was made on 1 July 1864 to the
Northern Pacific from Lake Superior to Puget Sound, with double its
normal land area in the western Territories and provision for an area
of indemnity. Another grant was made 27 July 1866 for the Atlantic
and Pacific from Springfield MO to Santa Barbara CA, as well as the
Southern Pacific lines from Oregon and California westward. On 3
March 1869, a grant was made for the Denver Pacific railroad. Finally,
on 3 March 1871, grants were made for branch lines of the Southern
Pacific and Texas and Pacific railroads from Marshall TX to San Diego
CA. In the case of smaller grants, or if special circumstances applied,
public lands continued to be granted directly to the States until 1871.
For instance, in the case of the Texas Pacific railroad line, as a result
of the special conditions of its entering the union, the State of Texas
maintained sole responsibility for transferring public lands within its
boundaries. For the rest of the Texas Pacific railroad line through New
Mexico, Arizona, and California the federal government took responsibility for transferring the remaining public lands directly.
Figure 15 is an 1878 map showing land grants made by the federal government for the construction of railroads and wagon roads,
with special emphasis on the railroad land grants west of the Mississippi River.9 What the map illustrates in a single glance is the fact that
the western United States was riddled with the equivalent of Canal
Zones, five-mile wide primary buffers on either side of a proposed
transcontinental transportation improvement within which the federal government exercised its powers to the exclusion of the power of
sovereign States, like California (1850). The map also shows proposed
locations of lines then not built as well as some forfeited routes, almost
all of which were due to failure to construct the line during the specified time limit. The minimum extent of the public land grant was its
primary limits, five miles on either side of the rail line. The maximum
extent of a public land grant was its indemnity limits, within which
9
Source of map is J. W. Powell in U.S. Congress (1878) cited above. See another
version of this map in Paullin (1932).
15. Transcontinental railroad land grants, equivalent to Canal Zones in the West
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the railroad could select vacant alternate sections to make up for lands
previously reserved or disposed.
Not including canals or wagon roads, railroad companies would
receive more than 215 million acres (355,000 square miles, or seven
times the State of Pennsylvania), only about six thousand square miles
less than the original thirteen colonies, resulting in 15,000 miles of
railroad.10 Nonetheless, by 1878 four public land grants for railroads
were forfeited and twenty grants lapsed due to non-compliance with
the terms of the grant. There was a great deal of public controversy
over railroad company practices in terms of continued use of public
lands despite violating the terms of federal contracts. Special acts of
Congress from 1884 to 1889 forfeited several railroad grants until a
blanket act was passed 29 September 1890 forfeiting public land grants
on all portions of railroads that were not constructed. Chief among
the forfeitures were the Texas Pacific grant in southern New Mexico,
Arizona, and California and part of the Atlantic and Pacific railroad
in northeastern New Mexico and California.
The financial panic of 1857, the Civil War (18611865), and the
financial panic of 1873 may have contributed to the financial undoing
of railroad projects, in which fully half or 40 out of the 80 subsidized
railroads were not completed in the time or extensions established by
Congress. However, for the most part railroad failures were due to
reckless and fraudulent management.11 Government officials were
accused in at least six different scandals involving alleged bribery of
Congressional, State, and Territorial officials by railroad companies
in exchange for things like securing public land grants or preventing
grants to competitors. Among the more infamous cases were those in
Minnesota and Wisconsin involving the Northern Pacific railroads
grant in 1867, the Texas and Pacific grant in 1871, and the Credit
Mobilier scandal involving fraudulent use of funds meant for the construction phase of the Union Pacific railroad. Some investigations even
led to the resignation of at least three members of Congress.12
The fact that 40 out of the 80 public franchises granted by Congress for railroads failed or had to forfeit their public lands due
mainly to fraudulent mismanagement of construction funds provides
10
11
12
Bureau of Corporations (1913).

Bureau of Corporations (1913, 248).
Bureau of Corporations (1913, 244 n. 2).
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an interesting baseline with which to compare the fate of the French

Panama Canal Company (La Compagnie Universelle du Canal Interoceanique). Nonetheless, the New French Panama Canal Company
was not compelled to forfeit its franchises with Colombia as a result
of non-compliance with its contract, but instead was allowed to extend
the terms of its contract three times.
D. Expansion of the Powers of the Federal Government
Over Other Buffer Zones
1. Forested Watersheds Adjacent to Navigable Rivers or Impacting
Water Resources
The expansion of the powers of Congress to withdraw public lands
in a buffer zone of a certain width around the line of railroads was
related to the expansion of the powers of Congress to withdraw forested watershed lands in a buffer zone around navigable rivers and
water reservoirs in order to protect public water resources. A key piece
of legislation was the Forest Reserve Act of 3 March 1891, signed by
President Benjamin Harrison essentially to repeal the Timber Culture
Act of 1873. Another legislative act, the Forest Management Act of
1897, soon followed.
A two-decade long debate led to passage of the Forest Reserve Act
of 1891 dealing with cases of fraud in grants for use of public lands
by the railroads. For example, a timber case was brought against the
Northern Pacific railroad because it had abused its rights to trade right
of way sections for rich timber lands. Recognition that deforestation
could increase the risk of fires and decrease water resources available
for navigable rivers and public water supplies elevated protection of
forested watersheds to a major national concern.
Congress had not been opposed to setting aside forested public
land to preserve natural aesthetic resources, such as Yellowstone
National Park in 1872, but recreational use or wilderness preservation were secondary issues. The driving force behind Congressional
acts like the Forest Reserve Act of 1891 was to set aside forested or
mountain watersheds adjacent to navigable rivers and water reservoirs as public lands in order to protect and preserve water resources.
The Forest Reserve Act and the Forest Management Act are relevant
to the Panama Canal because it gave Congress a constitutional basis
for exercising additional jurisdiction over the Panama Canals greater

watershed beyond the boundaries of the Canal Zone (see Canal Zone
in Figure 17 below).
E. The 1888 Supreme Court Decision in California
v. Central Pacific Railroad Company
1. Federal Constitutional Powers over the Transcontinental
Railroads to the Exclusion of the States
The Republic of Panama has engaged in what could easily be characterized as a form of States rights dispute over to what extent the
United States federal government can exercise its constitutional powers and authority in the Canal Zone to the exclusion of sovereign
rights exercised by the Republic of Panama. In fact, there is a direct
association between Panamas States rights dispute with the powers
of the United States federal government over the Panama Canal and
Canal Zone, and the State of Californias infamous and bitter disputes
with the United States federal government over the transcontinental
railroads.
2. A States Right to Tax the Value of a Public Franchise
In the Supreme Courts 30 April 1888 decision in California v. Central Pacific Railroad Company, the court cited the powers of Congress
to regulate commerce in Article I, Section Eight of the Constitution.
Congress had exercised its powers to a very limited extent in the past,
the only exceptions being the Cumberland or National Road, until
authority over transportation improvements into the interior crossing
the domain of several States was required as a result of the territorial
enlargement of the United States. The Supreme Court supposed that
unless Congress exercised sole jurisdiction, no one authority would be
able to regulate the consistent use, operation, and maintenance of the
vast transportation system in its entirety.
The question before the Supreme Court was, assuming the Central Pacific Railroad Company has franchises granted by the United
States federal government to serve national purposes, can the State of
California legitimately tax those public franchises? The judgment of
the Court was that the State of California might tax the outside visible
property of the company within the boundaries of the State, but as for
public railroad franchises that served national purposes connecting the
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Atlantic and Pacific coasts of the United States, the State of California can neither take them away, nor destroy nor abridge them, nor
cripple them by onerous burdens, nor tax them.
The Court explained its answer with respect to the question, What
is a franchise? Based on feudal traditions in which a royal privilege
or prerogative of the King subsists in the hands of one of his subjects,
a franchise is a right, privilege, or power of public concern, which
ought not to be exercised by private individuals at their mere will and
pleasure, but should be reserved for public control and administration,
either by the government directly, or by public agents, acting under
such conditions and regulations as the government may impose in the
public interest, and for the public security. Such rights, privileges, or
power of public concern exist in every society, the Court suggests, saying that in the United States franchises are under the authority of the
legislative branch of government. The Court lists several examples:
No private person can establish a public highway or a public ferry or
railroad, or charge tolls for the use of the same without authority from
the legislature, direct or derived. These are franchises. No private person can take anothers property, even for a public use, without such
authority, which is the same as to say that the right of eminent domain
can only be exercised by virtue of a legislative grant. This is a franchise.
No persons can make themselves a body corporate and politic without
legislative authority. Corporate capacity is a franchise. The list might be
continued indefinitely.
In light of the nature of franchises, the Court asks how it can be possible that a franchise granted by the Congress of the United States
can be subject to taxation by a State without its consent. Taxation is
a burden that may be laid so heavily as to destroy the thing taxed or
render it valueless, which can be arbitrary and with no limitations
whatsoever except those set by the taxing power itself based upon its
own estimation of the value of the franchise. Furthermore, the Court
says that the value of a franchise to the wider public good it serves is
not something measured like property. The Court stated:
The taxation of a corporate franchise merely as such, unless pursuant
to a stipulation in the original charter of the company, is the exercise
of an authority somewhat arbitrary in its character. It has no limitation
but the discretion of the taxing power. The value of the franchise is not
measured like that of property, but may be ten thousand or ten hundred
thousand dollars, as the legislature may choose. Or, without any valuation of the franchise at all, the tax may be arbitrarily laid. It is not an

idle objection, therefore, made by the company against the tax imposed
in the present cases. It only remains to consider whether the Southern
Pacific Railroad Company, as well as the Central Pacific, was invested
with any franchises derived from the government of the United States.
Of this we think there can be no question.
3. Social Saving and the Value of a Public Franchise

A social saving(s) can be used as an estimate of the public good a
transportation technology generates, measured in dollars as a proportion of a nations gross national product (GNP). A social saving
estimates the difference between a current situation and what people
either alone or as part of organization would have had to spend in
order to conduct their customary business activities in a hypothetical
world. In the hypothetical world all things can be assumed to be equal
except for the absence of a certain transportation technology.
The social saving methodology has been used mostly to compare
massively different situations, like history as we know it versus an
entirely different world in which the transcontinental railroads did not
exist and instead Congress only made grants for roads, river improvements, and canals. In his tour de force calculations, the economic
historian Robert W. Fogel stirred controversy when he developed his
social savings methodology to estimate that the American transcontinental railroads would have accounted for less than five percent of
United States GNP in the year 1890, a provocative suggestion that was
intended to challenge the assumption the railroads were indispensable
to the growth of the American economy.13
Fogels methodology has been applied to the Panama Canal for
the year 1924, similarly attempting to make a provocative suggestion
that the public social savings of the Panama Canal for the United
States would have paid off the initial investment by Congress, estimated at $372 million in 1924 dollars, within a single year.14 The
13
See Robert W. Fogel, A quantitative approach to the study of railroads in American economic growth: a report of some preliminary findings Journal of Economic
History 22 no. 2 (1962): 163197. See also Robert W. Fogel, The new economic history I: Its findings and methods, Economic History Review 19 no. 3 (1966): 642656;
and Robert W. Fogel, Notes on the social saving controversy, Journal of Economic
History 39 no. 1 (1979): 154.
14
For review and criticism of Fogels famous calculations of the social savings of
the American transcontinental railroads see Colin M. White, The concept of social
savings in theory and practice, Economic History Review 29 no. 1 (1976): 82100; and
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public social saving estimate for the Panama Canal in the year 1924
are summed together based on simplifying assumptions about the
direct effects of the Panama Canal, i.e., potential savings due to lower
shipping costs because of shorter distances, and the indirect effects
of the canal, i.e., potential savings due to higher volumes of foreign
and domestic trade and lower freight rates due to greater competition to the railroads.
Like Fogels original estimates, most of the public social savings are
the result of indirect effects. The difficulty with such calculations is
that they are entirely dependent upon a few key simplifying assumptions, offered completely absent of a sensitivity analysis demonstrating how alternate but equally likely assumptions about one or two
key variables could completely change the results. Not to mention,
social savings calculations use assumptions about hypothetical worlds
that challenge the historical imagination to say the least. For instance,
notwithstanding the dreams of the citizens of Indiana who in 1840
petitioned Congress for a system of canals to link the Columbia River
with the Missouri and Mississippi Rivers, why would Congress have
been more likely to support canals and roads instead of railroads after
1850 when history demonstrates the exact opposite was true?
Regardless, though an interesting exercise, a social saving estimate
is irrelevant. The Supreme Court decision in 1888 was not about by
what method a State could presume to estimate the value of a transportation franchise running through its borders in order to tax it, but
rather whether a State had any right at all to tax franchises granted
by Congress for transcontinental transportation. The 1888 decision of
the Supreme Court in California v. Central Pacific Railroad Company
was that regardless of speculation about the commercial value of a
franchise for public welfare or the common defense, Congress had the
constitutional authority to grant franchises for transcontinental railroads, but the States do not have the authority to tax those franchises
without the consent of Congress.
Paul A. David, Transport innovation and economic growth: Professor Fogel on and
off the rails, Economic History Review 22 no. 3 (1969): 506525. For specific applications of Fogels methodology to the Panama Canal see both Maurer and Yu (2008)
and Hutchinson and Ungo (2004), who though not citing one another use the same
method. The inference is that the United States federal government constructed the
Panama Canal as some sort of foreign investment opportunity.

F. Conclusion
With respect to most important details about matters of governance
and jurisdiction, the Panama Canal owes its much misunderstood
structure and function to American experience with the transcontinental railroads, including everything from the problem of foreign
immigrant labor to the bitter States rights disputes over the power to
tax the railroad; requiring a landmark decision between the government of the State of California and the United States federal government in 1888. Unfortunately for the State of California, their States
right dispute could only be leveraged as far as the Supreme Court
rather than, for instance, in the court of world opinion. Replace a
public franchise for a transcontinental railroad passing through the
State of California with a public franchise for an interoceanic canal
passing through the Republic of Panama, and one understands a great
deal more about the Panama Canal and Canal Zone than has generally
been offered.
The fact that Secretary of State John Hay would invoke the 1888
Supreme Court decision in California v. Central Pacific Railroad Company highlights the fact that the disagreement between the Republic of
Panama and the United States federal government over the Panama
Canal and Canal Zone was really a States rights dispute. Panamanian political leaders in the port cities had long and bitter experiences
advocating States rights against centralizing forms of government
established by the constitutions of Great Colombia (18191831), the
Republic of New Granada (18311858), and the Republic of Colombia after 1886. Even Panamas sovereign upgrade from a subordinate entity of the Republic of Colombia to an independent sovereign
nation in 1903 represents a situation oddly comparable to Wisconsins
upgrade from a Territory to a State in August 1846. Wisconsin became
a State in order to administer public lands granted within a strip of
territory five miles on either side of the Fox and Wisconsin Rivers
for internal transportation improvements. After the 1846 BidlackMallarino Treaty, Panamanians in the port cities engaged in a States
rights dispute simultaneously with the Republic of New Granada and
the United States federal government, which through the 1846 treaty
interposed itself between the federal State of Panama and its attempts
to charge taxes and fees on passengers, freight, and mail conveyed by
the Panama Railroad.
CHAPTER SEVEN
INTEROCEANIC TRANSPORTATION AND THE TWO

PANAMAS UNDER THE 1ST DEMOCRACY (1830S1870S)
Transportation During the 1st democracy (1830s1870s)
The 1st republic (1780s1820s) was the period of territorial enlargement in the Atlantic world. The beginning of the 1st democracy
(1830s1870s), also known as the Middle Period, Civil War, and Reconstruction, was also a period of territorial enlargement into the Pacific
world, but it was mostly a period of consolidation of inland territories
through internal transportation improvements. Adding territory on the
Pacific side of the continental divide led to expanded federal powers
over transportation improvements for the general welfare and common
defense of the United States, which had become two coasts separated by
a continent but with no natural water connection between them.
With the exception of the treaty with Russia for the purchase of
Alaska in 1867, most of the territorial enlargement of the United States
into the Pacific world occurred during the tenure of Democratic
President James K. Polk (18461850). The 1846 Oregon Treaty with
Britain resolved the border dispute over Oregon Country, and Oregon
Territory (18481853) became a territorial possession of the United
States. As a result of the Mexican-American War (18461848) and the
1848 Treaty of Guadalupe Hidalgo, Mexico was forced to accept the
loss of Texas (1845) and the territories of Upper California (Alta California) and New Mexico (Nuevo Mxico). A final adjustment between
Mexico and the United States was signed in 1853, an agreement called
the Gadsden Purchase, which added a section of territory possessing
certain physiographic advantages for a southern transcontinental railroad route. Still, in the absence of transcontinental railroads before
1869, overland travel for American passengers and troops on wagon
roads from gateway cities like St. Louis or Kansas City to Oregon Territory or California took at least three to five weeks.
On 3 March 1835, under the tenure of Democratic President
Andrew Jackson (18291837), a Senate resolution about a treaty with
New Granada was adopted:
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Resolved, That the President of the United States be respectfully
requested to consider the expediency of opening negotiations with the
Governments of Central America and New Granada for the purpose
of effectually protecting, by suitable treaty stipulations with them, such
individuals or companies as may undertake to open a communication
between the Atlantic and Pacific oceans by the construction of a ship
canal across the isthmus which connects North and South America, and
of securing forever by such stipulations the free and equal rights of navigating such a canal to all such nations on the payment of such reasonable tolls as may be established to compensate the capitalists who may
engage in such undertaking and complete the work.
The resolution illustrates that the policy of the United States during
the 1st democracy was avoidant when it came to an interoceanic
canal owned and operated by the federal government in foreign territory. At the beginning of the 1st democracy the constitutionality of
the powers of Congress over railroads and canals was still uncertain
when it came to the reserved powers of the States. Any potential use
of the powers of Congress over an interoceanic canal in a foreign territory was beyond consideration. Interoceanic communication by rail or
canal or other means in foreign territory was left to private enterprise,
aided by creating a regime of neutrality and free transit in treaties
with interoceanic communication-adjacent sovereign states in Latin
America and non-adjacent maritime powers in Europe.
The policy of the 1st democracy was to prevent powerful European
governments from gaining exclusive control and influence over interoceanic communication through Latin America, but avoid entangling alliances with Latin American nations. Presidents during the 1st
democracy asserted that the United States had an equal stake in protecting the free and neutral use of interoceanic communication across
Central America. That policy was implemented in the 1850 ClaytonBulwer Treaty between the United States and Britain, which stated
that neither nation would attempt to enforce exclusive control over
use of any form of interoceanic communication across the isthmus
that separated North and South America. Presidents during the 1st
democracy also asserted they would avoid entangling defensive alliances with newly independent Latin American nations against Europe
in exchange for exclusive American privileges, an avoidant posture
demonstrated by cautions articulated during ratification of the 1846
Bidlack-Mallarino Treaty and the disavowal of the 1849 Hise Treaty
with Nicaragua.
Under the protective umbrella of the 1846 Bidlack-Mallarino Treaty
between the United States and New Granada, in 1848 the Panama
interoceanic transportation and the 1st democracy 127

Railroad Company acquired an exclusive railroad franchise from the
Republic of New Granada. Including the Panama Railroad Companys
contract, there were at least 32 international agreements concerning
rights, privileges, and grants of land for interoceanic canals or railroads
during the period of the 1st democracy. Of the 32 agreements, 25
were between adjacent and non-adjacent governments, 6 were between
adjacent governments and private enterprises, and 1 was between two
non-adjacent governments (1850 Clayton-Bulwer Treaty).1
Of all the agreements signed during the period of the 1st democracy, none stands out more than the 1846 Bidlack-Mallarino Treaty
between the United States and the Republic of New Granada. Whereas
the entangling alliance in the 1849 Hise Treaty with Nicaragua was
disavowed, the 1846 Bidlack-Mallarino Treaty was ratified. The 1846
Bidlack-Mallarino Treaty was a remarkable exception to the general
policy during the 1st democracy to avoid entangling alliances.
1. The 1846 Bidlack-Mallarino Treaty
The Bidlack-Mallarino Treaty, also known as the Treaty of Peace,
Amity, Navigation and Commerce, was signed in Bogota on 12
December 1846 and ratified by the Democratic majority Senate of
the 29th Congress on 3 June 1848. Article 35 of the treaty was added
by representatives of New Granada just four days before the treaty
was signed. Article 35 stated the United States would guarantee New
Granadas sovereignty over its territory in Panama in exchange for
exclusive rights of free transit across the territory of Panama:2
And, in order to secure to themselves the tranquil and constant enjoyment of these advantages, and as an especial compensation for the said
advantages and for the favours they have acquired by the 4th, 5th and
6th articles of this treaty, the United States guarantee positively and
efficaciously to New Granada, by the present stipulation, the perfect
neutrality of the before mentioned Isthmus, with the view that the free
transit from the one to the other sea, may not be interrupted or embarrassed in any future time while this treaty exists; and in consequence,
1
See Gerstle Mack, The land divided (New York: Alfred A. Knopf, 1944) for surveys, treaties, and other events of interest to the interoceanic canal across Central
America, whether in Nicaragua, Panama, or elsewhere, which is fairly exhaustive.
2
See (U.S. Congress 1977b, 362). See also William M. Malloy, comp., Treaties,
conventions, international acts, protocols, and agreements between the United States
and other powers 17761909, 2 vols. (Washington, D.C.: Government Printing Office,
1910), 147. See also David Hunter Miller, Treaties and other international acts of the
United States of America (Washington, D.C.: Government Printing Office, 1931), 157.
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the United States also guarantee, in the same manner, the rights of sovereignty and property which New Granada has and possesses over the
said territory.3
1.1 Every Step and Misstep Towards an Entangling Alliance

A sample of candid reflections by early American and Colombian
political decision makers from almost 600 diplomatic letters between
1831 and 1860 reveals interesting details about why American representatives signed and ratified the 1846 Bidlack-Mallarino Treaty, as
well as some of the causes of civil unrest in the Panamanian port cities.4 One can look at every step and misstep of diplomatic maneuvering between representatives of the United States and Colombia leading
up to the 1846 Bidlack-Mallarino Treaty and probably conclude the
signing of the treaty was a mistake. Firstly, terms very similar to Article 35 had been unsuccessfully offered by Colombian representatives
at least twice before. Secondly, the American representative Benjamin
A. Bidlack had just arrived in Bogota to serve his duties and was acting
without up-to-date instructions. Thirdly, Bidlack agreed to the controversial Article 35 even though it was introduced into the treaty at the
last minute.
On three separate occasions in May 1835, April 1843, and December 1846, Colombian representatives insisted on an entangling alliance
as a condition for eliminating reciprocal import duties. Colombian
representatives were sharply warned after the first instance in May
1835. Speaking on behalf of President Andrew Jackson, Secretary of
State John Forsyth wrote that the apparent attempt to enter the United
States into entangling alliances was peculiarly unfriendly given
that avoiding such alliances was the cherished foreign policy of the
United States. Forsyths point of view was that a reciprocal lowering of
duties was offer enough and that Colombias demands for a political
alliance were not only unfriendly but unreasonable, since the United
States had already recognized Colombias independence from Spain,
U.S. Congress (1977b, 89). See also Gantenbein (1971, 6).

Of the sample of 584 letters in the Diplomatic Correspondence set, 77 had direct
bearing on American concerns about British interests in Panama, Panamanian secession, and the 1846 Bidlack-Mallarino Treaty. References to diplomatic correspondence include the author, the recipient and the date sent and unless otherwise cited
are from William R. Manning, comp., Diplomatic correspondence of the United States:
Inter-American affairs, 18311860. Vol. 5: Chile and Colombia (Washington, D.C.:
Carnegie Endowment for International Peace, 1935).
4

the only country Forsyth considered as possibly threatening Colombian territory. Another instance occurred in April 1843 during similar
commercial treaty negotiations. Colombian representatives seemed to
want exactly the same sort of thing as in May 1835 but apparently
chose not to insist on an alliance by name.
An entangling alliance was offered at least a third time in December 1846 to the newly arrived American representative, Benjamin A.
Bidlack. According to Bidlack, Colombian Minister of Foreign Affairs
Manuel Mara Mallarino advised him to agree to a guarantee of sovereignty as a special condition for the commercial privileges in the
treaty. Otherwise, Mallarino said, his government would be obliged to
grant the same sorts of commercial privileges to the British unconditionally because of an existing trade agreement with Britain. Bidlack
responded that a guarantee might be considered very little short of
a treaty of alliance, and that such treaties were inconsistent with the
established and cherished policy of the United States. However, Bidlack accepted Mallarinos explanation for why it was, technically, not
an entangling alliance. Mallarino said that the treaty was not a general alliance but only a Gurantee [sic] limited to the Isthmus, such
as would not be at all inconsistent with the early declared policy of the
United States in relation to the South American Republics as reiterated
by President Polk to the Congress of 1845.6 Mallarino also offered a
number of rationales for the preventive merits of the treaty against
British designs over Latin American territory. Nevertheless, the formal
protocol to the treaty dated 9 December 1846 stated that the treaty
might quoad hoc be considered at least a quasi alliance; and, to some
extent, contrary to the policy of the United States.
1.2 Senate Advice and Consent to Ratification of an Entangling
Alliance
The Bidlack-Mallarino Treaty was introduced into the United States
Senate by President James K. Polk on 10 February 1847 for advice and
consent to ratification. Discussion of Article 35 figured highly in Polks
message.5 Polk stated:
5
According to Miller (1931, 158) Secretary of State James Buchanan wrote the
presidential message that Polk presented to the Senate. See also (Manning 1935, 360
passim).
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No person can be more deeply sensible than myself of the danger of
entangling alliances with any foreign nation. That we should avoid such
alliances has become a maxim of our policy consecrated by the most
venerated names which adorn our history and sanctioned by the unanimous voice of the American people. Our own experience has taught us
the wisdom of this maxim in the only instance, that of the guaranty
to France of her American possessions, in which we have ever entered
into such an alliance. If, therefore, the very peculiar circumstances of the
present case do not greatly impair, if not altogether destroy the force of
this objection, then we ought not to enter into the stipulation, whatever
may be its advantages. The general considerations which have induced
me to transmit the treaty to the Senate for their advice may be summed
up in the following particulars.
If Polk himself said that Article 35 of the Bidlack-Mallarino Treaty

was an entangling alliance, why would he endorse the treaty for Senate
consideration? Why did more than two-thirds majority of the Senate
vote for ratification?
It is not a revelation to suggest that Polk had a more territorially expansionist, i.e., aggressively preventive, agenda than many of his Democratic
peers. Polk favored a policy of annexing the remainder of Spains former
territories in the Pacific world by force so that they would not fall into
British hands, and perhaps also to court the political support of Southern
Democrats looking to expand the institutions of slavery to new western
territories. Polk distinguished himself from other Democratic leaders by
his willingness to threaten war with Britain over Oregon Country, and
his willingness to go to war with Mexico over Texas, Upper California,
and New Mexico.6 Nonetheless, Polk provided four reasons why the Senate should not vote against the treaty. First, Polk said Article 35 benefited
the United States more than New Granada. Second, Polk insisted that
because Article 35 applied only to the Isthmus of Panama and not all
of New Granada it did not violate the policy of avoiding entangling alliances with foreign nations. Third, Polk said that Article 35 was not an
alliance for a political object but for a purely commercial purpose, the
pursuit of which all maritime nations share.
The fourth and most elaborated of Polks rationales is that the
United States took on an obligation in Article 35 not for itself alone
6
Mary Wilhelmine Willams, Anglo-American isthmian diplomacy, 18151915
(Washington, D.C.: American Historical Association, 1916), 53, said that the 1846 Bidlack-Mallarino Treaty was, by design, part of President Polks expansionist agenda.

but for the entire maritime world. In fact, Polk assured Congress that
other non-adjacent powers like Britain and France would sign similar
neutrality agreements with New Granada. The neutrality of the Isthmus of Panama had to be defended in the interests of civilization and
commerce; otherwise the freedom to use an interoceanic canal would
be subject to the whim of hostilities between the great maritime powers. Guaranteeing New Granadas sovereignty over Panama thereby
guaranteed that the territory would not be annexed by a non-adjacent
maritime nation, and was a means to prevent conflicts between European powers and the United States over exclusive control. New Granada would never consent to give the territory up to become a neutral
state and even if it would, Polk says, the Isthmus of Panama is not
sufficiently populous or wealthy to establish and maintain an independent sovereignty. Polk said that if the agreement was not ratified by
the Senate, the United States would not have the distinction of being
the first non-adjacent nation to protect the neutrality of interoceanic
communication across Panama.
2. Neither European Governments nor the United States Should Have
Exclusive Control
The United States during the regime of the 1st democracy expanded
the constitutional powers of the federal government to grant railroad
franchises across western United States territories, and simultaneously, attempted to contain European governments from expanding
their extraterritorial powers over interoceanic communication across
Latin American nations. In other words, the policy of the 1st democracy was to consolidate its Pacific world with its Atlantic world
through transportation improvements both internally and externally.
The foreign policy of the 1st democracy was to prevent European
governments from maneuvering with one another for exclusive control over an interoceanic canal or railway between North and South
America as a means of consolidating their global maritime empires,
as had been the case around the Mediterranean entrance to the Suez
Canal. The general dtente between the United States and European
powers was that no non-adjacent power, including the United States,
would annex or establish fortifications around the line of an interoceanic canal or railway in foreign territory, and that construction and
operation would be left to private enterprises protected by joint guarantees of free use and neutrality.
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2.1 The Disavowal of the 1849 Hise Treaty with Nicaragua

On 30 June 1847, two years before the Hise Treaty was signed, Britain
proclaimed contested territory on the Caribbean coast of Nicaragua in
the name of the independent Mosquito Kingdom. Britain had a longstanding formal relationship with the Mosquito Kingdom going back
to the eighteenth century. It is probable, therefore, that representatives
of Nicaragua negotiating the terms of the 1849 Hise Treaty felt the
treaty could be used to respond to Britains claim of a protectorate
over the Mosquito Kingdom.
Article 4 of the Hise Treaty gave the United States the right to erect
fortifications and station troops along the line of the canal for protection and defense. Article 5 stated that United States fortifications could
be used to preserve the peace and neutrality of Nicaraguan territory.
Potentially most entangling was Article 12. Article 12 obligated the
United States to use its armed forces to protect and defend all territories rightfully within Nicaragua or to recover territories wrongfully
wrested from Nicaragua. Article 12 stated that United States obligations did not apply to wars of aggression or territories not rightfully
within Nicaragua. In combination with Article 12, Article 6 even
stated that vessels of countries at war with or carrying contraband to
countries at war with either the United States or Nicaragua shall not
be allowed to pass through the interoceanic canal.
If Nicaragua claimed it was at war with Britain over the territory of
the Mosquito Kingdom, then British vessels would be excluded from
using a Nicaraguan canal. The treaty promised that the United States
would enforce such a blockade of British vessels with its own armed
forces until such time as Nicaragua did not consider itself at war with
Britain. Whig President Zachary Taylor refused to submit the Hise
Treaty to the Senate. Hise, who allegedly acted without authority, was
recalled. The disavowal of the 1849 Hise Treaty with Nicaragua and
almost simultaneously the signing of the 1850 Clayton-Bulwer Treaty
between the United States and Britain effectively ensured that neither
the government of the United States nor Britain would attempt by
force to deny use of interoceanic communication to each other or to
other nations, even in times of war.
2.2 The 1850 Clayton-Bulwer Treaty
On 28 December 1848, the Panama Railroad Company signed an
agreement for an exclusive privilege to construct a railroad across the
Isthmus of Panama. President Zachary Taylors Secretary of State John

M. Clayton said that Thomas W. Ludlow, President of the Panama
Railroad Company, sent a letter to the Department of State requesting
that the American minister at London cooperate with the Colombian
minister to draft a neutrality agreement with Britain similar to the
1846 Bidlack-Mallarino Treaty so that the capital to be invested in the
Panama Railroad Company would be secure.
Clayton wrote to United States Minister to Great Britain Abbot
Lawrence in London on 13 December 1849 that he was to prevent
foreign debt from becoming an avenue for British interference in New
Granadas affairs by asking that Britain sign a neutrality agreement
with New Granada similar to the 1846 Bidlack-Mallarino Treaty. New
Granadas debt became an issue for the United States, given its promises in the 1846 Bidlack-Mallarino Treaty. In fact, Clayton asserted his
own version of what later became the Roosevelt corollary to the Monroe doctrine regarding pre-emptive United States action to prevent
European intervention in the affairs of Latin American governments
to collect on debts.7
If Britain would not sign a treaty with New Granada, and such
would probably be the case, then Lawrence was to ask about bilateral
negotiations between the United States and Britain for the same purpose. Clayton said:
It is obviously of the utmost importance, especially in consideration of
the opinions expressed by Lord Palmerston with reference to the Spanish American States who are dilinquent [sic] debtors of British subjects,
that the British Government should guaranty the neutrality of the Isthmus of Panama as amply as this has been done by the United States. For
this purpose, it would be preferable that Great Britain and New Granada should themselves enter into treaty stipulations. It is scarcely probable, however, in the existing state of the relations between those two
countries, that this could be accomplished. You will, nevertheless, avail
yourself of a suitable opportunity to suggest it to Lord Palmerston . . . If,
however, you shall ascertain that the British Government would not
enter into such a treaty with New Granada, you may then sound Lord
Palmerston as to the disposition of his Government to conclude one
with the United States for the same purpose.
7
See letter from Clayton to Foote on 19 July 1849, referring to the obligations the
United States agreed to in 1846 treaty and the threat posed by British indemnification
for New Granadas debt.
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In a letter dated 15 December 1849, Clayton also instructed the American representative in Bogota to press New Granada about signing a
neutrality treaty with Britain.
The United States and Britain proceeded as non-adjacent powers to
begin negotiations for a bilateral neutrality agreement. In London on 14
December 1849, United States Minister to Great Britain Abbot Lawrence
wrote to British Secretary for Foreign Affairs Lord Palmerston saying:
No other nations in the world have so important interests to be affected
by it no others have the requisite capital at command no others have
shown a willingness to guaranty the neutrality essential to its safety
and capital, always timid, would shrink from it without such guaranty
much more were it the cause of disagreement between these two nations.
Though Great Britain or the United States may each be in a position
to do this work single handed, yet neither would probably desire to do
so. It may therefore be assumed that the two Countries desire to go
on with the work, through their respective capitalists, together and harmoniously, and that, in the absence of any obstacles, it would be soon
completed and in operation.
The proposed negotiations would settle American and British differences over an interoceanic canal or railroad and would lead to the
ratification of the 1850 Clayton-Bulwer Treaty.
The Clayton-Bulwer Treaty was signed on 19 April 1850. The United
States and Britain agreed that neither nation would attempt to deny use of
an interoceanic canal or railway to the other, with several provisions prohibiting the building of adjacent fortifications. Article 8 of the treaty stated
that the agreement concerned a particular object as well as a general
principle of neutrality. The particular object was agreeing that any interoceanic canal or railroad across the isthmus between North and South
America would be neutral and equally accessible to the two non-adjacent
powers. The general principle was that neutrality and equal access would
be afforded to all the nations of the world, canals or railways, being open
to the citizens and subjects of the United States and Great Britain on equal
terms, shall also be open on like terms to the citizens and subjects of every
other State which is willing to grant thereto such protection as the United
States and Great Britain engage to afford.
3. Exclusive Franchises Granted to Private Corporations Cannot Fall
Into the Hands of a European Government
American concerns about possibly being denied free and neutral use of
interoceanic communication through Central America were focused on,

but not limited to, the power of European governments. American concerns also extended to European private corporations, for two reasons.
One reason had to do with whether a private corporation had the means
to construct an interoceanic canal of sufficient capacity. For example,
United States Charg dAffaires at Bogota Robert B. McAfees wrote to
the Minister of Foreign Affairs of Colombia Lino de Pombo on 31 May
1834 that a communication across the Isthmus of Panama would be a
project worthy of the united exertions and influence of all the governments of the continent. However, McAfee questioned whether a private
company alone had the means to build a canal commensurate with the
hopes and expectations of the commercial world.
Another American concern was whether the financial interests of
a private enterprise could fall into the hands of a powerful European
government. When Latin American governments granted exclusive
franchises to a private corporation, there were often concluding articles
stating that if the companys rights or assets were transferred to a foreign government the franchise would be null and void. For instance,
Article 23 of the original franchise for a railway granted to the French
Panama Company by New Granada in 1847 stated that the privilege
could not be ceded to a foreign government under penalty of abrogation. Article 28 of the Panama Railroad Companys contract with New
Granada also stated that contract privileges cannot be transferred to
any outside government.
It is a reasonable speculation supported by evidence from Congressional hearings to say that the beginning of the financial takeover of
the French Suez Canal Company in November 1875 by British Prime
Minister Benjamin Disraeli, who used private funds to gain an interest over the French Suez Canal company after purchasing the shares
of the debt-ridden Khedive of Egypt, was what created the preventive
policy of Republican President Rutherford B. Hayes that would define
the 2nd republic (1870s1930s). Only a few years after the financial
takeover of the French Suez Canal company by Britain in 1875, and
the signing of the Wyse Concession in 1876 for a French interoceanic
canal company in Panama, Hayes asserted in March 1880 that the
policy of the United States was an American canal under American
government control.
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B. The Two Panamas Under the Centralized Republic of

New Granada (18311858)
1. The Two Panamas and States Rights Disputes with the Republic
of New Granada
1.1 British Annexation as a Solution to Panamas States Rights
Dispute with the Republic of New Granada
Colombian representatives clearly wanted a promise from the United
States to guarantee New Granadas sovereignty over the Isthmus of
Panama. The United States was clearly motivated to guarantee the
sovereignty of New Granada over the Isthmus of Panama in order to
prevent the territory from falling into the hands of a European government, perhaps on the pretense of indemnification for a debt. But why
was New Granada motivated to secure a defensive alliance with the
United States? There were at least two possibilities. One was that New
Granadas sovereignty over Panama was threatened by Britain as a
form of repayment for New Granadas financial debt, and New Granada sought to interpose the United States as a shield. Another possibility was that New Granadas sovereignty was threatened because of
domestic Panamanian separatist movements.
The evidence from diplomatic correspondence is not very clear that
New Granadas debt with Britain was likely to have led to British annexation of Panama. Confidential Agent of the United States to Colombia
Charles S. Todds letter to Secretary of State John Quincy Adams on 29
March 1823 relayed early rumors of a failed British scheme to annex
the Isthmus of Panama. In 7 December 1835, Colonel Charles Biddle,
appointed as Special Agent of the United States to Colombia by President Andrew Jackson to inquire about an interoceanic railroad across
the Isthmus of Panama, warned that influential men presumably in
Panama but possibly in Bogota had made overtures to Britain to place
the Isthmus of Panama under the protection of the British government. Interestingly, Biddle said that he believed New Granada would
be dismembered in two years and probably nine months with Panama
seceding as an independent state.
It is not clear that British representatives seriously considered annexing the Isthmus of Panama, although Biddles concerns were not without some precedent given British interests in several former territories
of Spain. Though British representatives may have thought about, but

never acted on, a unilateral protectorate over the Isthmus of Panama
the author is only aware of one actual British proposal offered to the
United States in 1842, which was for a multilateral protectorate over
Panama between Britain, the United States, and France. Possible joint
United States and British protection over Panama was the more likely
possibility. For example, until the 1846 Oregon Treaty the United States
and Britain exercised joint jurisdiction over Oregon Country. After
signing the 1846 Bidlack-Mallarino Treaty, President Polk said that
he fully expected Britain would sign an agreement with New Granada
guaranteeing Panamas neutrality, something that was encouraged by
Secretary of State Clayton in 1849. Nonetheless, bilateral negotiations
between the United States and Britain in late 1849 had already begun
in order to explore general principles that would guarantee that neither
nation would attempt to deny use of interoceanic communication to
other nations by other means, that is, means other than guaranteeing
New Granadas sovereignty.
In nearly every case in which American representatives reported
to Washington D.C. about possible British designs on the Isthmus of
Panama, whether as indemnity for New Granadas debt or as part of
a grand geopolitical maneuver to control routes of interoceanic communication, facts are offered and duly qualified as speculation, perception, or hearsay. In more than one case, representatives of New
Granada liberally offered their own imaginative speculations about
Britain designs in Panama, in fact, likening them to those of Russia
over the Dardanelles in order to command the entrance to the Black
Sea. For instance, in a letter on 25 February 1837, Colombian Charg
dAffaires at Washington Domingo Acosta warned Secretary of State
Forsyth that the British would certainly attempt to seize Panama, under
the pretext of indemnification. Acosta even suggested that the United
States rise up and assert its rightful geographic stake on the Isthmus
of Panama, just as Britain had done over the Bosporus in the Mediterranean Sea, concluding piously that he had no other motive other than
the welfare of his nation and that of all America. Perhaps because
the consequences of ignoring such information would potentially put
the United States at a severe disadvantage, American representatives
stationed in Colombia felt compelled to note any and all reports of
possible British designs on Panama no matter what the credibility of
the source.
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1.2 An Entangling Alliance with the United States as New Granadas

Solution to its States Rights Problem with Panama
The evidence is much clearer about political dissent in the Panamanian
port cities as the principal motivating factor behind New Granadas
intent to sign an entangling alliance with the United States. After declaring independence from Spain in November 1821 Panama joined the
short-lived Great Colombia union. In 1831, Great Colombia broke up
into what now represents Venezuela, Ecuador, Peru, Colombia, and Panama. Colombian representatives met in 1831 to approve a new centralizing constitution and in 1832 the Republic of New Granada was officially
formed. Panama remained a subordinate entity within New Granada.
Among the many political changes in Panama under the centralizing
Republic of New Granada was a period of reorganization that subdivided
Panamas traditional provinces. The longstanding province of Veraguas
was reorganized as two provinces, Veraguas and Chiriqui, in 1849. The
province of Panama was also reorganized as two provinces, Panama and
Azuero, in 1850.
There were many different separatist movements emerging on the
Isthmus of Panama between 1831 and 1840, which some later observers described as struggles for Panamanian independence. There are
two aspects of the separatist movements suggesting they were not
independence movements. One aspect is that it is difficult to find any
declarations of separation from Bogota that actually demanded Panama become a free and independent sovereign nation. Another aspect
is that Panamanian declarations of separation were proclaimed by
people living in the society of the port cities, identified through signatures on Panamas acts of secession in 1821, 1830, 1831, and 1840; and
not people from the society of the interior.8 In fact, the society of the
Panamanian interior more than once opposed the political ambitions
of the maritime-commercial elite in the port cities by military force.
American representatives writing to Washington D.C. from Bogota
describe Panamanian political dissent in the port cities between 1831
and 1860 in terms that sound to this author like a States rights dispute. A States rights dispute is a political challenge by representatives
8
Figueroa (1978, 131) said that the monopoly of power in Panama City and
adjacent regions was in the hands of a small elite group, which he identified based
partly upon the signatories of the acts of independence in 1821, 1830, 1831, and 1840.
Figueroa (1978, 134) says that European observers saw Panamas small urban oligarchy as more like a tribe (tribu) than a social class.

of a federal State against the federal government over the constitutional
balance of powers. States rights advocates claim the States possess certain powers and authority that are excluded to the federal government,
even if the Constitution does not explicitly name those powers. Panamas elite maritime-commercial society disputed Bogotas measures
to impose a centralized authority, but separation from New Granada
meant different things to different people.
Sometimes the maritime-commercial elite separatists in the port
cities demanded a new constitution to reform the Republic of New
Granada (18311858) and guarantee Panamas federal States rights.
For example, in a letter on 5 December 1840 the Chief of the State
of the Isthmus Toms Herrera announced to President Martin Van
Buren that a new State of the Isthmus wished to be recognized as an
independent sovereign nation, but then in a curious twist said that the
State of the Isthmus would remain independent only until such time
as a new federal system could be arranged with New Granada giving
Panama the sovereign rights of a State. Another plan proposed a loose
federal arrangement that would shift the Isthmus of Panamas political dependency to Ecuador based on close commercial relations. Still
another separatist plan proposed a semi-independent sovereign state
under the protection and patronage of the great foreign maritime powers, e.g., a combination of Britain, France, the United States, or others.
The political ambitions of the maritime-commercial elite were to
create a government whose purpose was to sustain and generate wealth
from direct, indirect, induced, and parallel commercial activities and
services associated with foreign flows in transit; not a government
motivated to consolidate the territory of the interior, insure public
order, and defend against attack by foreign nations. By creating civil
unrest and political disorder in the port cities, the maritime-commercial elite often had to be opposed by military leaders sent from Bogota
or from elite landowners in Panamas own territorial-administrative
interior. The territorial-administrative elite of the interior may have
supported some of the ideals of Panamanian independence against
New Granada, but they were not prepared to go to war with Bogota
over the right of the maritime-commercial elite to accumulate wealth
in the port cities.
Nonetheless, there were important exceptions to the leading role
played by the maritime-commercial elite in the port cities in insurrections against New Granada. When the lower echelons of Panamas
maritime-commercial society in the port cities supported Panamanian
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independence under a military government in 1830, the elite of the two

societies united against it. General Jos Domingo Espinar, the Comandante General del Istmo (General Commander of the Isthmus), had to
use threat of force to prevent the maritime-commercial elite in the port
cities from soliciting a protectorate from Great Britain in the turmoil
surrounding the breakup of Great Colombia.9 Yet according to one
Panamanian historians interpretation, General Jos Domingo Espinar
had his own personal ambitions to govern Panama in the unfolding
breakaway of Ecuador, Peru and Venezuela from Great Colombia in
1830.10 In September 1830, Espinar himself rebelled against the central government of Great Colombia, allegedly in response to his being
transferred to another command. Espinars revolt, politically supported
by those living in the arrabal (literally suburb or slum) meaning
the urban lower classes, represented the first time in Panamas history
that such an important political move had been undertaken without
the direction of the maritime-commercial elite.11
Espinar believed that he had to consolidate his control over the territory of Panama by not only controlling the port cities but also the
interior of the Azuero Peninsula and its core at the city of Santiago
de Veraguas. Espinars plans for an invasion of the Panamanian interior was thwarted by one of his own officers named Colonel (or General) Juan Eligio Alzuru, who staged a military coup against Espinars
authority in 1830 supported by Jos de Fbrega, an elite interior latifundista (large landowner) from Santiago de Veraguas. The temporary
alliance between the territorial-administrative and maritime-commercial elite in 1830 against Espinar eventually disintegrated and the political maneuvers of Panamas maritime-commercial elite opposed by
the territorial-administrative elite continued as the Republic of New
Granada consolidated its sovereign authority over Panama.
2. The 1846 Bidlack-Mallarino Treaty and American Flows across
Panama on the Panama Railroad
President George Washington had warned Americans in 1796 that
to look for disinterested favors from another; that it must pay with
a portion of its independence for whatever it may accept under that
9
10
11
Perez-Venero (1978, 22 n. 46).

See Figueroa (1978).
Figueroa (1978, 245).

character; that by such acceptance it may place itself in the condition
of having given equivalents for nominal favors, and yet with being
reproached with ingratitude for not giving more. . . . There can be no
greater error than to expect or calculate upon real favors from nation
to nation. Certain turns of phrase in Washingtons warnings like pay
with a portion of its independence, and the great error in thinking
that giving equivalents means one can expect favors without being
reproached for not giving more they are all eerily echoed in diplomatic correspondence between the United States and New Granada.
For instance, there were two sets of promises made between the
United States and the Republic of New Granada in the 1846 BidlackMallarino Treaty. One set of promises were equivalents of each other.
The United States and Republic of New Granada agreed to lower
import duties on each others products. Since the abolishment of differential duties was reciprocal, in Bidlacks understanding they could
not fairly give either the United States or New Granada any claim
for other equivalents. Later, it was clear that representatives of New
Granada did not necessarily agree. However, for the most part this
first set of promises was not uncommon in the commercial world and
generated little misunderstanding.
However, the second set of promises in the 1846 Bidlack-Mallarino
Treaty were not equivalents of each other and led to a great deal of
misunderstanding. The United States was promised favorable rights
of transit through Panama in exchange for which the United States
promised to guarantee the rights of property and sovereignty of New
Granada over the territory of Panama, purportedly against threats to
the freedom and neutrality of interoceanic communication. Bidlack
said that the American guarantee of New Granadas sovereignty was a
favor that he expected would be reciprocated through New Granadas
promise to guarantee a free right of way or right of transit. Bidlack
entered an understanding to the treaty that in exchange for the United
States guaranteeing New Granadas sovereignty over the Isthmus of
Panama, New Granada promised to guarantee a non-discriminatory
right of transit across the Isthmus of Panama.
Within a decade after signing the 1846 Bidlack-Mallarino Treaty,
United States representatives had committed the great error of miscalculating what favors could be expected as a result of non-equivalent
promises made between nations. Colombians and local Panamanians
did as little as they could to uphold promises not to apply discriminating charges and duties that singled out American flows, which was a
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promise that American representatives mistakenly expected had been

made through Article 35 of the 1846 treaty and through the Panama
Railroad Companys contract.
For instance, in a letter dated 6 June 1853, Colombian Charg
dAffaires at Washington Victoriano de Diego Paredes protested to
Secretary of State William L. Marcy that American troops had crossed
the Isthmus without advising Colombian officials of the province of
Panama beforehand. Secretary of State Marcys reply was that the
United States had counted on New Granada to see the American
obligation to guarantee Colombias sovereignty over the Isthmus of
Panama as more than a fair exchange for allowing the free transit of
American citizens and property across the Isthmus, including United
States troops. Marcy said:
When, however, independent States enter into treaties with foreign powers, they expect to relinquish their sovereignty in part with the expectation of receiving from the power with which they treaty, full equivalents
therefor. The Undersigned considers that by the treaty above referred to,
New Granada has received from the United States an ample equivalent
for any sacrifices she may have made in entering into it.
In his reply on 19 July 1853, Paredes argued that his government had
never regarded the first set of promises as equivalents. Rather, New
Granada had agreed to lower its import duties in exchange for the
American guarantee of the neutrality of the Isthmus of Panama. Seemingly, then, there was no obligation or favor to be asked of New Granada with respect to free transit across Panama. In any event, Paredes
felt that New Granada could not be reproached by the United States
for not giving more to the United States, since it had already surrendered its most precious rights of sovereignty. Paredes said:
[I]t is no less certain, on the other side, that nations, in surrendering a
portion of their sovereignty, do so in an explicit and conclusive manner . . . . this article had no other object then that of counterbalancing, by
means of a guaranty of the Isthmus, those privileges and prerogatives
granted to the United States, especially in what concerns the exemption
from the payment of duties called differential . . . if it be true, that the
treaty through[ou]t, is essentially liberal to both parties, this liberality
could not have been carried to such an extreme, on the part of New
Granada, as to involve the surrender of her sovereignty and the sacrifice
of her most precious rights . . . such as to allow, under all circumstances,
the transit of troops by the aforesaid Isthmus.12
12
Letter from Paredes to Marcy dated 19 July 1853.

2.1 The Federal State of Panama
Liberal Party constitutional reforms in Bogota in 1853 led to the creation of a new federal State of Panama in 1855, the same year that
the Panama Railroad line was completed. It is sometimes challenging
to separate diplomatic correspondence to the United States from the
Panamanian representatives versus the Colombian representatives of
the Republic of New Granada. Nonetheless, the source of the discriminatory laws against American flows on the Panama Railroad after 1853
was the federal legislature of the State of Panama, not the legislature of
the Colombian federal government in Bogota.
Before 1856, the difference of opinion about the legitimacy of the
Panamanian laws in light of Article 35 of the Bidlack-Mallarino Treaty
seems to have been handled as well as could be expected through diplomatic channels. Declaring that it was not obligated to surrender
the exercise of sovereignty over things within or passing through its
territory, officials of the federal State of Panama passed legislation to
collect vessel tonnage duties on vessels and passenger taxes on goods
and people in transit across the Panama Railroad. The Panamanian
legislature even passed a law to charge postage on United States mail
conveyed in transit by the Panama Railroad. Authorities of the State of
Panama stated that the 1846 treaty merely gave citizens of the United
States the same privileges as Colombian citizens with respect to transit
across the Isthmus of Panama, and that charges and duties applied
equally to both citizens of the United States and New Granada. American representatives complained that the charges and duties were, in
effect, discriminatory against American flows since all knew that the
overwhelming majority of tonnage, passengers, and mail in transit on
the Panama Railroad were from the United States.
Articles in the Panama Railroad Companys reformed contract of June
1850 stated that flows of people, goods, finance, and messages in transit
not meant for importation into New Granada were exempt from taxes,
import duties, or postage. Article 16 of the Panama Railroad Companys
contract said that transit of all foreign mails is free, unless by nations
at war with Colombia. Article 21 stated that passengers, merchandise,
etc., in transit are free of duties and that the terminal ports are free
ports; and Article 6 gave the company control over regulation and use
of the terminal ports. In exchange, the Panama Railroad company paid
fixed annuities to the New Granada of which a portion went directly to
the State of Panama. Article 3 required the company to pay Colombia
$1,000,000 ($26,315,789 adjusted to 2007 dollars) upon approval of the
contract and an annuity of $250,000 per year ($6,578,947 adjusted to
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2007 dollars) until the expiration of the contract, with 10 percent of the
annuity directly to the Government of the State of Panama. Nonetheless, most American political representatives pointed to Article 35 of the
Bidlack-Mallarino Treaty, claiming that free transit exempted American flows of goods, people, finances, and messages in transit across the
territory of Panama on the Panama Railroad from indiscriminant taxes,
import duties, postage, or other fees.
Tonnage duties, passenger taxes, and postage became minor matters
after the 15 April 1856 Panama City riots, or the Watermelon War
as it has been labeled. The origin of the phrase comes from the fact
the incident started when a drunken American passenger ate a piece
of watermelon from a street vendor, refused to pay for it, and then
pulled a gun. A comparable incident might be the 18381839 Pastry
War between Mexico and France, at least in terms how a minor food
incident became violent under the pretext of indemnifying a debt,
completely out of proportion to the original offense.13
An original report filed by A. B. Corwine dated 18 July 1856 is the
United States investigation of the 15 April 1856 riots, comparing two
principal sources of evidence. One source was eyewitness testimony
Corwine gathered himself. Another was testimony taken from the official account presented by Panamanian Governor Francisco de Fbrega.
In comparing the two sources of evidence, Corwine says that there
were discrepancies in the testimonies used for the Colombian report
that could not be rectified with testimonies he had collected, as well
as facts from the official Colombian report that implicated officials of
the State of Panama. In any event, American investigators alleged that
federal representatives of the government of New Granada and local
representatives of the State of Panama failed in their duties to protect
the lives and property of American passengers in transit, allegations
that ranged from negligence to complicity.14 Petty thefts of passenger valuables in transit (and not by Panamanians) were common and
probably to be expected in the port cities. However, the April 1856
riots were the most serious of many incidents in the port cities over
13
The 1856 Watermelon War, at least in the origins of its name, is similar to
18381839 Pastry War between Mexico and France. The origin of the war was allegedly
a French pastry chef who complained his shop had been looted by Mexican officers.
14
According to a letter from Morse and Bowlin to de Pombo and Gonzalez on 13
February 1856, the riots caused the deaths of eighteen Americans and wounded forty
or fifty others. There were two reported Colombian deaths, neither directly related to
actions at the Panama Railroad station house.

the previous six years where authorities in Panama were unable to
maintain law & enforce order on this Isthmus & afford adequate protection to the transit.15
The more common explanation and one stated in the Colombian
report in 1856 is that economic oppression and racial prejudices
imposed upon the urban residents of Panama City by American passengers in transit simply exploded over a trivial dispute. Historicist
interpretations of the April 1856 riots accept this version of events
but unfortunately treat the incident in isolation from other instances
of social unrest in the Panamanian port cities. There seems little purpose in re-narrating factual knowledge known to many scholars and
available in the National Archives about the April 1856 riots.16 Investigating other cases of civil unrest in the port cities, including those
involving or not involving American citizens in transit on the Panama
Railroad, would at least serve as a rudimentary comparison for the
purpose of understanding the political and racial mixture of the cosmopolitan port cities and its impact on local Panamanian politics and
Colombian governance. A comparative perspective of other instances
of civil unrest in the port cities would shed important light on social
unrest due to prejudices or economic oppression in the port cities
directed against the maritime-commercial elite and government officials of New Granada.
Even without the benefit of insightful comparative scholarship, there
is at least one interesting feature of Panamanian Governor Francisco
de Fbregas testimony about the April 1856 riots that bears mentioning. Fbrega reiterated several times that he had neither the power nor
the means to control the situation. Fbrega makes a peculiar effort to
point out how few were the police under his command. Fbregas testimony clearly implicated the government of the State of Panama and
the Republic of New Granada as utterly unprepared to maintain order
in the port cities, having at the ready a mere twenty five police to control thousands. Interestingly, the Panama Railroad Company was not
severely implicated for failures to take security measures. For instance,
Article 14 of the Panama Railroad Companys contract stated that the
company could propose what it deemed proper for the police, security,
15
See several articles of contemporary observers reporting about their experiences

across the Isthmus of Panama, The maritime heritage project, Ports of the world: Panama (http://www.maritimeheritage.org/ports/centralAmericaPanama.html).
16
See Manning (1935, 388 n. 2).
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and preservation of its facilities. Regardless of who failed to exercise

their duties, it was clear that the source of civil unrest came from a
large and economically disadvantaged population, many presumably
non-Hispanic immigrants of African origin, and other lower echelon
residents living in the port cities.
In a letter from Bowlin to Marcy dated 17 September 1856, a few
months after the riots, Bowlin wrote that new mail and tonnage taxes
were calculated to inspire the Caribbean black population of the port
cities to more desperate deeds as they can easily be made to believe,
that they have a personal interest in these sums, and they are unjustly
withheld from them by our Government and people. In another letter
written by Minister Bowlin to Secretary of State Marcy dated 5 November 1856, Bowlin makes an extraordinary suggestion. Bowlin said the
true aim behind the continued obnoxious laws and extortionate
exactions of representatives of the State of Panama, whose interests
he differentiates from the government at Bogota, was to drive the
U.S. from necessity to take possession of the Isthmus, in other words,
establish a security presence in the racially charged port cities. Bowlin
believed that annexation by the United States was their true, ultimate
and sole aim because of the effect that an American guarantee of
order would have on real estate values. Finally, in another letter from
Bowlin to Pombo dated 10 November 1856, Bowlin claimed in colorful terms that tonnage and mail taxes were being held out to the urban
non-elite and Caribbean black population as some kind of reward to
them for intimidating American citizens in transit.
Supposing there is any grain of truth to Bowlins opinions or the
conclusions of the Corwine report, exploiting or failing to prevent the
economically oppressed in the port cities from attacking American
passengers would have two consequences. One consequence was that it
would seriously embarrass the federal government at Bogota as unwilling or unable to protect American citizens and property in transit,
leading to a situation where the United States could abrogate the 1846
treaty and take possession of the Isthmus of Panama. Another consequence was that the deaths of American citizens provided a demonstration of just how bad the state of public order had become in the
port cities, given the gulf in wealth between the maritime-commercial
elite and those living in the arrabal. Either outcome would result in
new security and public safety measures implemented by the Panama
Railroad and the United States itself.

After the 1856 riots, an American proposal called the 1857 project
was drafted and included with a 3 December 1856 letter from Secretary of State Marcy to Special Commissioners Morse and Bowlin for
New Granada to cede its control over a portion of the territory of the
Isthmus of Panama so that it might become a semi-independent maritime municipality under the protection of the United States. Marcy
said that the 1857 project was similar to British proposals for Greytown at the terminus of the Rio San Juan route in Nicaragua and the
Bay Islands off the north coast of Honduras. Marcy stated that it, in
fact, had the approval of Great Britain. Secretary of State Marcy said
that the 1857 project was not a full grant of territory but a federalist
arrangement, like the United States itself. He noted that certain powers would be transferred to a higher authority while the rest would be
reserved to the original sovereign of the territory. In a letter to Secretary of State March on 6 February 1857, Bowlin casually mentions
a curiosity. He said that the day after he submitted the 1857 project
to Colombian authorities for their review, a senator from the State of
Panama proposed the same thing to the Colombian Senate.
C. The Two Panamas Under the Federalist Grenadine
Confederation (18581863) and United States of Colombia
(18631886)
1. The Two Panamas and States Rights Disputes Against the United
States After the 1846 Bidlack-Mallarino Treaty
A major influx of foreign merchants and Caribbean blacks to Panama
occurred during the construction of the Panama Railroad between
1851 and 1855 and at the beginning of construction by the French
Panama Canal Company in 1881. The number of Caribbean immigrants of mixed African origin in Panama between 1881 and 1911,
probably Panama Canal laborers, was put at about 43,000.17 For the
maritime-commercial elite, the imported Caribbean black labor force
was a market for consumer goods and housing, and also an urban
mass beyond elite control. What made the situation potentially threatening for the Panamanian elite was that Caribbean black immigration
17
Jan Surez (1978, 453).
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associated with the construction of the Panama Railroad and French

Panama Canal coincided with a period of political turmoil between
Liberals and Conservatives, resulting in constitutional reforms during the Liberal-dominated period aimed at restraining the power of
Conservatives.
The centralized system of provinces under the Republic of New
Granada was replaced by a federal system of states under the Grenadine Confederation (Confederacin Grenadina) from 1858 until 1863,
and a federal system of nine states under the United States of Colombia (Estados Unidos de Colombia) from 1863 until 1886. The Liberal
constitutional reforms in 1853 that created the federal State of Panama
abolished certain property and literacy requirements for the right to
vote and gave urban residents of Panama City and Coln new political influence in elections in Panama.18 A black Liberal Party was even
formed, independent of the traditional Liberal and Conservative Party
leadership.
The maritime-commercial elite in the port cities had essentially two
rivals and one opposition in the political arena.19 Two of the urban
elites political rivals were territorial-administrative. One rival was the
landowning elite of the Panamanian interior particularly in Santiago
de Veraguas. The other rival was the central government in Bogota.
The opposition to the urban elite came from within urban maritimecommercial society itself, the maritime Panamanian commercial lower
classes and ethnically marginal urban groups on the outskirts of Panama City in the arrabal. The political strength of those living in the
arrabal or urban lower classes meant they might want bureaucratic
positions in the government, the start of a civil rights issue in Panamanian society.
Racial and class-based violence was not unique to the situation with
American passengers on the Panama Railroad in April 1856, which is
why the explanation based on American prejudices alone suffers from
a lack of comparative rigor. The political numbers of the Caribbean
black population threatened the political power of the maritime elite
several times during civil disturbances in 1856, 1885, and between 1900
and 1902 when the Colombian War of One Thousand Days nearly
became a race and class war. One option the maritime elite had for
18
19
See Bergquist (1978, 12).


counterbalancing the political influence of the urban lower-class was
outside enforcement by the United States. One historian of Panama
called the eventual political arrangement between the maritime-commercial elite and the United States an alliance against the lower echelons of society in the port cities:
Separated from the Hispanicized blacks by race and class, and separated even further from the new wave of Antillean blacks, the Panamanian upper class looked to the canal-building powers as countervailing
forces in the domestic arena. This tendency was natural in that it represented an extension of informal relations dating back to the colonial
period. During the nineteenth century these cultural and social ties to
the outside world had been further strengthened by the influx of foreign merchants who married into local families. Commercial relations,
administrative ties through the transit companies, common racial and
class characteristics all supported the formation of a tacit internalexternal alliance.20
For instance, after the 1856 Panama City riots United States military
forces were called in to restore order in Panama City on 20 September 1856. Until Panamanian independence in November 1903, United
States military forces landed in Panama several more times in order
to restore order and calm civil unrest in the port cities and elsewhere
over periods ranging from one day to nearly a month, including September 1860 in Panama City; May and September 1873 in Panama;
January, March, and April 1885 in Coln and April 1885 in Panama
City; March 1895 in Bocas del Toro; November 1901 in Panama City
and Coln; four different occasions in 1902; and lastly, in November
1903 during Panamanian independence.
D. Conclusion
Territoriality over the environment of Panama during period of the
1st democracy (1830s1870s) was an interaction between a predominantly American avoidant posture, and a maritime-commercial elite
in Panama engaged in a States rights dispute with centralized and
20
Steve C. Ropp, Panamanian politics: From guarded nation to National Guard
(Stanford: Hoover Institution Press, 1982), 10. See also Steve C. Ropp, In search of
the new soldier: Junior officers and the prospect of social reform in Panama, Honduras,
and Nicaragua (Unpublished Ph.D. dissertation, University of California, Riverside,
1971).
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federalist forms of government in Bogota. Though predominantly an

avoidant policy regime, the more expansionist elements of the regime
of the 1st democracy (1830s1870s) entangled the United States into
an alliance with Colombia by signing the 1846 Bidlack-Mallarino
Treaty. The United States intended to prevent powerful European governments from gaining exclusive control over interoceanic communication. However, as an unintended and unanticipated consequence
of its preventive policies, the United States was the only non-adjacent
nation to sign a guarantee of New Granadas sovereignty against foreign threats.
The treaty obligations assumed by the regime of the 1st democracy
to guarantee Colombias sovereignty over Panama conflicted with the
aspirations of the elite of Panamas maritime-commercial society for
a semi-independent federal State. When Panama achieved federal
rights as the State of Panama, its maritime-commercial elite leaders
proved ill adapted at maintaining civil order among the Caribbean
black immigrants living in the arrabal around the port cities without
outside assistance. After riots caused the deaths of several American
citizens in transit on the Panama Railroad, the United States federal
government intervened several times during periods of civil unrest to
maintain order and security in the port cities. By the 1870s and the
end of the 1st democracy, around the same time that economically
disadvantaged non-elite inhabitants of the port cities were gaining new
political power as a result of Liberal constitutional reforms, a fifty-year
period of economic crisis and recovery was recycling in the United
States. A predominantly preventive policy regime, the 2nd republic,
emerged to assert that the policy of the United States was a canal under
American government control.
CHAPTER EIGHT
INTEROCEANIC TRANSPORTATION AND THE TWO

PANAMAS UNDER THE 2ND REPUBLIC (1870S1930S)
BEFORE PANAMANIAN INDEPENDENCE
A. American Territoriality Over
Interoceanic Transportation
The predominantly avoidant policy of the 1st democracy was to prevent a canal under exclusive European control, but avoid entangling
alliances with Latin American nations. United States representatives
advocated treaties with European maritime powers and established a
general principle that no one nation would attempt to deny use of
interoceanic communication to others. The 1846 Bidlack-Mallarino
Treaty and the 1850 Clayton-Bulwer Treaty supported the predominantly avoidant policy of the 1st democracy for a canal under the
control of no one single government. The policy of the United States at
the time was not an American canal under American control, owned
and operated by the United States federal government.
The policy regime of the 2nd republic (1870s1930s), the period of
the Gilded Age and the Progressive Era, ushered in a shift to a preventive policy with respect to any European involvement whether by a
government or a private corporation in the ownership, administration, and operation of an interoceanic canal. There were at least 23
international agreements and contracts either signed or ratified for an
interoceanic canal or railroad during the first half of the 2nd republic
(1870s1930s) before Panamanian independence and the 1903 HayBunau-Varilla Treaty. Two were between adjacent governments, five
were between adjacent and non-adjacent governments, thirteen were
between adjacent governments and foreign corporations, and one was
between two non-adjacent governments (1901 Hay-Pauncefote Treaty
between the United States and Great Britain). The most important
agreement concluded during the 2nd republic was the 1903 HayBunau-Varilla Treaty between the United States and the Republic of
Panama, which established a canal under the control of the United
States federal government in a foreign territory.
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chapter eight
The shift away from the avoidant policy of the 1st democracy
(1830s1870s) had become clear by the time of an 8 March 1880 message to Congress by Republican President Rutherford B. Hayes, two
years after an exclusive franchise for an interoceanic canal was given
to the Interoceanic Canal Association of France in 1878. Hayes stated
that the policy of the United States was a canal under American control. In a curious turn of phrase, Hayes said that an interoceanic canal
through Central America was virtually a part of the coast line of the
United States. Hayes stated that the United States could not consent
to the surrender of this control to any European power, or to any
combination of European powers. Since American commercial and
ultimately national security interests over a canal across any part of
Central America were paramount to those of other nations, the United
States would demand exclusive control to protect our national interests, which nonetheless would be compatible with the wider needs of
maritime commerce. Hayes stated:
The policy of this country is a canal under American control. The United
States cannot consent to the surrender of this control to any European
power, or to any combination of European powers. . . . An interoceanic
canal across the American isthmus will essentially change the geographical relations between the Atlantic and Pacific coasts of the United States
and the rest of the world. It will be the great ocean thoroughfare between
our Atlantic and our Pacific shores, and virtually a part of the coast line
of the United States. Our merely commercial interest in it is greater than
that of all other countries, while its relations to our power and prosperity as a nation, to our means of defense, our unity, peace, and safety,
are matters of paramount concern to the people of the United States.
No other great power would, under similar circumstances, fail to assert
a rightful control over a work so closely and vitally affecting its interest and welfare. . . . [I]t is the right and the duty of the United States to
assert and maintain such supervision and authority over any interoceanic canal across the isthmus that connects North and South America as
will protect our national interests. This I am quite sure will be found not
only compatible with, but promotive of, the widest and most permanent
advantage to commerce and civilization.
American representatives repeated and clarified Hayes new policy.

For instance, a month after Hayes message to Congress, in April
1880, the American foreign minister in Bogota wrote to a Colombian
government representative that the United States would not consider
itself excluded from the United States of Colombias contract with
the French interoceanic canal enterprise, that is, by any arrangement
interoceanic transportation and the 2nd republic 153

between other powers or individual to which it is not a party, from a
direct interest, and if necessary a positive supervision and interposition
in the execution of any project which, by completing an interoceanic
connection through the Isthmus, would materially affect its commercial interests, change the territorial relations of its own sovereignty,
and impose upon it the necessity of a foreign policy, which, whether
in its feature of warlike preparation or entangling alliance, has been
hitherto sedulously avoided.1 In another example, on 24 June 1881
Secretary of State James A. Blaine drafted a circular letter explaining
Hayes policy of a canal under American control.2 Blaine stated that
any attempt by a consortium of European citizens to participate in
the ownership or operations of an interoceanic canal, regardless of
whether it had ties to European governments, would partake of the
nature of an alliance against the United States. Blaine said that in
the event of war with the United States the passage of hostile armed
vessels through an interoceanic canal in Panama, would be no more
admissible than would the passage of the armed forces of a hostile
nation over the railway lines joining the Atlantic and Pacific shores of
the United States.
1. The United States Should Have Exclusive Powers Over Those of
Any European Government
1.1 The Disavowal of the 1884 Frelinghuysen-Zavala Treaty with
Nicaragua
On 8 December 1885, Democratic President Grover Cleveland disavowed an agreement signed during the administration of Republican
Chester A. Arthur and withdrew the 1884 Frelinghuysen-Zavala Treaty
concerning the Nicaraguan canal from Senate consideration. Article II
of the treaty called for a perpetual alliance between the United States
and Nicaragua, in which the United States would protect the territorial integrity of Nicaragua. Cleveland stated the treaty violated the
avoidant policy of Washington against entangling alliances. Cleveland
also effectively disavowed Hayes policy of a canal under American
control saying that neither the United States federal government nor
U.S. Congress (1977b, 4647).

Harmodio Arias, The Panama Canal: A study in institutional law and diplomacy.
Reprint edition (New York: Arno Press & The New York Times, 1911/1970), 4344.
2
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any other single government should control what ought to be managed for the benefit of the entire world. Cleveland said:3
Maintaining, as I do, the tenets of a line of precedents from Washingtons day which prescribe entangling alliances with foreign states, I do
not favour [sic] a policy of acquisition of new and distant territory or the
incorporation of remote interests with our own. . . . Whatever highway
may be constructed across the barrier dividing the two greatest maritime
areas of the world must be for the worlds benefit, a trust for mankind,
to be removed from the chance of domination by a single power, nor
become a point of invitation for hostilities or a prize for warlike ambition. An engagement combining the construction, ownership, and operation of such a work by this government, with an offensive and defensive
alliance for its protection, with the foreign state whose responsibilities
and rights we should share, is, in my judgment, inconsistent with such
dedication to universal and neutral use.
The disavowal of the 1884 Frelinghuysen-Zavala Treaty parallels the

disavowal of the 1849 Hise Treaty. Both treaties were agreements for
exclusive American control over a canal in Nicaragua in exchange for
an entangling alliance against Britain and its territorial interests over
British Honduras and the Mosquito Kingdom in Nicaragua. However,
in all other respects, the disavowal of the 1884 Frelinghuysen-Zavala
Treaty was an exception to the rule. Although the policy of the 2nd
republic was not to form entangling alliances with Latin American
nations, its policy had shifted away from the 1st democracy policy
of a canal under no one governments control to a canal under the
control of the United States federal government.
1.2 The 1901 Hay-Pauncefote Treaty
The 1901 Hay-Pauncefote Treaty between the United States and Britain was signed 18 November 1901 in Washington, and entered into
force on 21 February 1902. The Hay-Pauncefote Treaty abrogated the
1850 Clayton-Bulwer Treaty, removing the only existing agreement
with a European power that might have prevented the United States
federal government itself from acquiring exclusive control. Article II
of the Hay-Pauncefote Treaty stated that a canal may be constructed
under the auspices of the United States federal government, but only
the United States federal government. Article III stated that the canal
Arias (1911/1970, 50).

was to be free and open to vessels of commerce and war on terms of
entire equality of use and charges.
Specific provisions of Article III of the Hay-Pauncefote Treaty stated
that without impairing the abrogated Article VIII of the 1850 ClaytonBulwer Treaty, the same principles governing use of the Suez Canal in
the 29 October 1888 Convention of Constantinople (Istanbul) would
be adhered to. The canal can never be blockaded but the United States
could position military police along the canal to protect it. The canal
and everything associated with it were to be immune from attack. The
area within 3 marine miles of either end of the canal was to be neutral.
However, a warship of a belligerent cannot remain there for more than
24 hours, and vessels of another belligerent cannot leave within 24
hours of the departure of another. Vessels of war of a belligerent will
be transited with least possible delay, but no belligerent could embark
or disembark troops or munitions.
2. Exclusive Franchises Granted to Private Corporations Cannot Fall
Into the Hands of a European Government
2.1 The French Panama Canal Company (18781894)
In May 1876, a Frenchman named Lucien N.B. Wyse negotiated an
exclusive franchise from the United States of Colombia for an interoceanic canal. In March 1878, Wyse signed an enlarged contract with
the United States of Colombia on behalf of the International Interoceanic Canal Association of France, which entered into force 18 May
1878. The 1878 contract awarded exclusive rights of canal construction
to the International Interoceanic Canal Association of France led by
Ferdinand De Lesseps. The contract between Colombia and the Interoceanic Canal Association (Wyse Concession) was amended 20 May
1878 and again on 10 December 1890 with the Republic of Colombia.4
The Compagnie Universelle du Canal Interoceanique was incorporated
under French law on 3 March 1881. De Lesseps gave only passing
notice to American preventive postures against an interoceanic canal
controlled by a foreign private enterprise. De Lesseps was quoted from
a letter written 14 August 1879 and published much later in a French
newspaper dated 15 November 1880 that he was sure he had removed
every possible hostility in the United States.
4
See Report of the Isthmian Canal Commission (1901) for a brief summary of the
Universal Interoceanic Canal Company between 1880 and 1894.
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chapter eight
In the same year 1880, Hayes presented his message to Congress

announcing that the policy of the United States was a canal under
American control. Congress affirmed President Hayes message and
adopted a preventive posture against the French company mainly due
to the risk that the companys financial interests might fall into the
hands of a European government.5 A joint Senate and House resolution, published in an accompanying House document dated 14 February 1881 entitled Interoceanic Canal and the Monroe Doctrine,
declared that the French private companys efforts were hostile to
the established policy of the United States, is in violation of the spirit
and declarations of the Monroe doctrine, and cannot be sanctioned or
assented to by this government:
Resolved by the Senate and House of Representatives of the United States
of America in Congress assembled. That the construction of an interoceanic canal connecting the waters of the Atlantic and Pacific by means of
foreign capital, under the auspices of and through a charter from any
European government, is hostile to the established policy of the United
States, is in violation of the spirit and declarations of the Monroe doctrine, and cannot be sanctioned or assented to by this government. That
the United States will assert and maintain such control and supervision
over any interoceanic canal as may be necessary to protect its national
interests, as a means of defense, unity, and safety, and to advance the
prosperity and augment the commerce of the Atlantic and Pacific States
of the Union.
Elaborating some of the details of the 1881 House hearings provides

an opportunity to see some of the first thoughts about extending the
preventive implications of the Monroe doctrine to non-state and substate actors, like the French corporation, and to areas far from the borders of the United States. The intent of the House was to examine the
history of use of the Monroe doctrine to date and determine whether
it was ever applied to a situation involving a European company and
an interoceanic canal in Central America.
For example, the House reviewed published historical writings of
James Monroe, John Quincy Adams, and Thomas Jefferson looking
for cases where the preventive mandate of the Monroe Doctrine was
See also U.S. Congress, House, 50th Cong., 2nd Sess., House Report No. 4167, The
construction or control of interoceanic canals at the Isthmus of Darien and in Central
America by European governments (Washington D.C.: Government Printing Office,
1889).

invoked in Central America. President James K. Polk had invoked
the Monroe doctrine in consideration of the independent Republic
of Yucatn (18411848) in 1848. Polks plan was to annex the struggling territory to the United States so that it would not fall into British hands. Former Secretary of State John C. Calhoun (18441845)
criticized Polks use of the Monroe doctrine in the case of the Republic of Yucatn for two reasons. One was that he considered British
annexation hardly more than a remote possibility and not a credible
threat requiring preventive action. Second, Polks use of the Monroe
doctrine violated the policy to avoid entangling alliances. Calhoun felt
that if the United States responded to every threat of European interference in the foreign affairs of Latin American nations it would go
infinitely and dangerously beyond the Monroe doctrine and puts it
in the power of other countries on the continent to make us a party
to all their wars.6
A number of witnesses representing private corporations were called
to testify to the House Committee on Foreign Affairs about application of the Monroe doctrine to the French private enterprise in Panama. It is sometimes difficult to separate their testimonies from their
affiliations as either representatives of the French canal company or
its competition. Representatives of the French company testified that
the Monroe doctrine only applied to foreign governments. Representatives of competing concerns tried to conflate the private enterprise
with the ambitions of the French government.
James B. Eads, an engineer, asked whether it was wise on the part
of the United States to side by quietly and see this transit line established in Panama by the French company that would control access to
agricultural production in the Valley of the Mississippi, an interesting
parallel to President Thomas Jeffersons apprehensions in 1802 about
French control of New Orleans as the gateway to the Mississippi River.
S. L. Phelps, representing the Nicaragua Ship Canal Company, even
suggested there was a conflict of interest between the foremost men
involved in the Panama canal project and the Bonaparte family.
The reference to the Bonaparte family by Phelps is intentional
because of its insinuation that the goals and ambitions of the French
company were not just financial profit but political power. French
interest in the Suez Canal itself was a product of Napoleon Bonapartes
U.S. Congress (1881, 7).
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chapter eight
military expedition to conquer Egypt in 1798, and well known associates of the French canal company were friends and relatives of Louis
Napoleon. Ferdinand De Lesseps own father was made a count by
Napoleon Bonaparte, and De Lesseps later efforts to raise capital for
the Suez Canal project had been endorsed by Charles-Louis-Napolon
Bonaparte (Emperor Louis Napoleon). Lucien Wyse, who had arranged
the contract with Colombia was actually Lucien Bonaparte-Wyse and
was related to Napoleon Bonaparte.
The hearsay about possible family-related conflicts of interest
between Louis Napoleon and influential French company executives
would have been of interest to the House because of its relevance to
French intervention in Mexico to establish a European system of government on the borders of the United States. Between 1862 and 1867,
a period when the United States was preoccupied with the Civil War,
Emperor Louis Napoleon supported the recognition of and a military
alliance with the Confederate States of America. Louis Napoleon also
advocated the reintroduction of the monarchy to the former colonies
of Spain in Latin America and intervened in Mexico by installing Austrian-born Maximillian I as its Emperor, supported by French troops.
Maximillian I remained the Emperor of Mexico until he was executed
in 1867 by Mexican forces under Benito Pablo Jurez Garca, militarily supported by the United States following the end of the Civil War.
The implication was that surely a family connection between Louis
Napoleon and the principals of the French company was cause for
concern by American representatives that the company could be a vestige of a European government that had clearly demonstrated in the
past it would use its own military forces to interfere in the affairs of
independent Latin American governments if the United States were
not vigilant to prevent it.
The testimony of Mr. Thompson, an American representative of
the French Panama Canal Company, advocated an avoidant posture
and asked whether in the unnecessary avowal of a great doctrine
against a foreign private corporation, not a foreign government, the
United States was preparing to interpose itself in a way that would
involve us in difficulties and complications from which during our
lifetime we may not escape. Thompson, referring to the fact that European capital had invested in American railroad corporations, asked
rhetorically why the United States would not think that the transcontinental railroad was a combined effort on the part of Europeans to
get control of this country.

2.2 Does the Preventive Posture of the Monroe Doctrine Apply to a
Non-State Actor Like a Private Corporation?
The House Committee on Foreign Affairs asked about whether the
French government had officially declared any interest in controlling
the French Panama Canal, whether the French company had a charter
or a concession from the Republic of Colombia under the terms of
the Wyse concession, and how that the company was organized under
French law. According to Article XVIII of the original 1876 Wyse
Concession, after the canals successful construction and opening the
company would form an international joint-stock company under the
protection of Colombia. The intent of the Committee was to ascertain whether the French private company was, nonetheless, vulnerable
to financial takeover by the interests of a foreign government. It was
determined that the French company was a concession, not a charter
from Colombia, meaning that the French Panama Canal company was
incorporated in France under the same French laws as those that had
organized the French Suez Canal company.
The most interesting passage of the proceedings was a question and
answer between Mr. Rice of the House Committee and Mr. Thompson, representing the French Panama Canal Company, asking whether
the rights or assets of the French company could be transferred to
another foreign government. Similar to the tenets of the later 1904
Roosevelt corollary to the Monroe doctrine, Rice must have had in
mind whether the French companys controlling interest were vulnerable to being purchased or transferred, given the example of the Khedive of Egypt being compelled by his nations debt to sell its interest in
the Suez Canal to British Prime Minister Benjamin Disraeli in 1875.
Mr. Rice: . . . . [D]oes not that principle which underlies the Monroe doctrine come into the consideration of this question? If a foreign company,
or a corporation, under the control and protection of a foreign government comes here and takes possession of a strip of land across the Isthmus of Panama, and proceeds to build a canal there, does not that bring
up again the principle that underlies the Monroe doctrine?
Mr. Thompson: I have been endeavoring to draw a distinction between
a private corporation and a foreign government.
The minority report to the House Committee on 18 February 1881 said

that the Monroe doctrine is one confining itself to the interference of
European powers with American states; and is silent as to enterprises
by individuals of whatever nationality, for making improvements on
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this continent. The minority report proposed a resolution establishing that no foreign government other than the sovereign of the territory itself would be allowed to possess or control an interoceanic
communication. The resolution would also establish a safety measure
so a policy like that of the later 1904 Roosevelt corollary United States
would not be necessary. The resolution stated that the United States
would not interfere in Colombias affairs in order to prevent it from
employing foreign capital so long as there were proper precautions for
neutrality. Furthermore, the minority report stated that the intent of
President Hayes 1880 message to Congress only referred to when private interests whether foreign or otherwise were invaded or actually
threatened. The minority report concluded by stating that Congress
should continue to move forward as if the San Juan River route in
Nicaragua was the primary option for a canal under American control,
since both the cooperation and consent of Colombia and the French
company would be necessary if the canal in Panama was completed.
In December 1888, La Compagnie Universelle du Canal Interoceanique went into financial failure after spending vast sums of money. On
4 February 1889 the company was declared bankrupt and dissolved
by Tribunal Civil de la Seine. A receiver appointed by the French civil
tribunal was given the authority to transfer the companys assets and
property to the New French Panama Canal Company, the Compagnie
Nouvelle du Canal de Panama, incorporated 20 October 1894. Wyse
represented the receiver and negotiated a continuation of the old
French companys exclusive franchise from the Republic of Colombia
in December 1890. The contract was extended twice more, once in
April 1893 provided that a new company was organized by 31 October
1894, and again in April 1900 extending the time period of the contract to 31 October 1910. The New French Panama Canal Company
extended the exclusive franchise originally conceded in May 1876 but
was distinct from the original company not only in terms of its organization but also in terms of its role in influencing the United States
to consider the Panama route.7 In 1898, the new companys contract
was due to expire either in 1904 or 1910, unless the company could
provide $1 million (unadjusted) dollars to Colombia. There was a provision in the New Panama Canal Companys concession forbidding
7
See James M. Skinner, France and Panama: The unknown years, 18941908 (New
York: Peter Lang, 1989).

its transfer to a foreign government. What this apparently meant
was that the French company could not be transferred to the United
States without Colombias consent.8 A Senate subcommittee report, on
the other hand, stated the company did have the right to transfer its
properties to a foreign government without Colombias consent.9
B. The Two Panamas Under the Republic of Colombia
(18861903)
1. The Two Panamas and States Rights Disputes with the
Republic of Colombia
Beginning with the period of non-elite inter-societal migrations and
foreign immigration associated with the ascending phase of the Panama Railroad (18491903), the sources of political rivalry were not just
between the elite of the two Panamas but within and across the nonelite of Panamas two societies as well. It was this continuing political
rivalry, complicated by inter-societal migration and foreign immigration in the context of the ascending phase of the Panama Canal
(1903present) that entangled the United States for most of the 20th
century.
The late 19th century urban maritime-commercial oligarchy in
Panama had essentially two rivals and one opposition in the political
arena.10 Two of the urban elites political rivals were predictably territorial-administrative. One rival was the landowning elite of the Panamanian interior particularly around Santiago de Veraguas. The other
rival was the central government in Bogota, Columbia. The opposition
to the urban elite came from within urban maritime-commercial society itself, the maritime-commercial lower classes and ethnically marginal urban groups on the outskirts of Panama City.
Despite missing out on the return of prosperity to the maritime
cities following the construction of the Panama Railroad, many elite
interior family members remained in the interior (e.g., surnames such
as De la Guardia, Arosemena, Mir, and more recently, Fbrega and
8
Charles D. Ameringer, The Panama Canal lobby of Philippe Bunau-Varilla and
William Nelson Cromwell, American Historical Review 68 no. 2 (1963): 346363. See
especially Ameringer (1963, 351).
9
Ameringer (1963, 355).
10
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Chiari). Unlike the cross-fertilization that occurred at the elite level,

life in the rest of Panamanian society remained more or less distinct
between the western interior and the maritime cities until the construction of the Panama Canal. For almost all of the pre-independence
period before 1903, communication between middle and lower echelon groups in the western interior and the maritime cities was rare.11
The majority of the population of the interior maintained a self-sufficient rhythm (ritmo autnomo) in their everyday life, orchestrated
by a rural elite preoccupied with continuity and stability. However, a
new telegraph service between Panama City and the principal towns
of the interior in 1892 created an instant communications network for
exchanging messages and building relationships over long distances.
Population growth in the Panamanian interior had resulted in at least
three regional population cores in Cocl, Veraguas and later Chiriqu,
semi-distinct sources of internal migration to the maritime cities.
Panamanian maritime-commercial societys dissatisfaction with
Colombias lack of interest in advancing Panamanian expectations
produced a number of revolts and rebellions on the Isthmus between
1821 until 1903. One author lists a total of six 19th century separatist
movements on the Isthmus of Panama including independence from
Spain in 1821 and essentially States rights disputes with the government at Bogota in 1830, 1831, 1840, 1841, and 1863.12 A more complete
list of 19th and early 20th century political disputes in Panama would
include civil unrest in 1885, 1900 and 1902. One historian argues that
Panamanian nationalism began in the 19th century as continuing
revolt against Colombia.13 Nonetheless, political and military leaders
from the central Azuero Peninsula challenged the political ambitions
of the urban maritime elite during the 19th century.
The landowning elite of Santiago de Veraguas more successfully
opposed the interests of the commercial bourgeois of Panama City
when they could make political and social alliances with the small
rural landowners (las fingueros) on the border regions, thereby presenting a more unified interior political front.14 The interior leader
11
Jan Surez (1978, 490).

Manuel Maria Alba Carranza, Cronologa de los gobernantes de Panama: 1510
1967 (Panama: Imprenta Nacional, 1967, 248).
13
Ricuarte Soler. Panam: nacin y oligarqua, 19251975 (Panama: Imprenta Cervantes, 1976).
14
12

who could ally with middle echelon landowners and also marginal
groups in Panama City presented a particularly formidable threat to
the maritime elite. Diagramming crossover political alliances might
explain the impact of socio-geographic mobility on the relative successes and constituency differences between well-known 20th century
interior political leaders like Arnulfo Arias, Jose Antonio Remn Cantera, and Omar Torrijos Herrera.15 Leaders from the interior seeking
to create a political movement against powerful maritime-commercial
elite factions need only look along social class and racial fault lines
within cosmopolitan maritime-commercial society itself, including
within the maritime elite.16
Historically speaking, it was not just the large numbers of Caribbean
immigrants that posed a political threat to the maritime elite.17 During the middle of the 19th century, Caribbean immigration coincided
with Colombian constitutional reforms during Liberal-dominated
administrations (Confederacin Grenadina, 18531863; Estados Unidos de Colombia, 18631886). Liberal constitutional reforms in 1853
abolished certain property and literacy requirements to vote, thereby
giving the marginal urban masses of Panama City and Coln a new
political influence in presidential and legislative elections in Panama,
including a separate wing of the Liberal Party.18
One political option for the maritime-commercial elite to counterbalance the political influence of the urban port citys lower-class and
maintain order was to bring in outside support.19 However, the Panamanian elites racial and cultural affinities with Europeans and Americans were not sufficient causes to trigger American action against
Caribbean blacks or other foreign immigrants in Panama. The only
15
Sharon Phillips Collazos, Labor and politics in Panama: The Torrijos years (Boulder: Westview Press, 1991), 32. See also Ropp (1982, 28).
16
Marco Gandsegui, La concentracin del poder econmico en Panam, in
Ricaurte Soler, ed., Panam: Dependencia y liberacin (Panama: Ediciones Tareas,
1986), 99184. Ropp (1982, 72) and Gandsegui (1986) divide the Panamanian elite
by race.
17
Jan Surez (1978, 453) puts the total number of Jamaican immigrants of mixed
African origin in Panama between 1881 and 1911 at about 43,000. It is sometimes
unclear in other sources whether Jamaican immigrants should be considered synonymous with Panama Canal manual laborers, or whether they were artisans and other
laborers in the port cities.
18
Charles W. Bergquist, Coffee and conflict in Colombia, 18861910 (Durham:
Duke University Press, 1978), 12.
19
Ropp (1982, 10).
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instances when Panamas social issues became a direct and actionable

American concern occurred when American representatives felt racial
and class-based violence threatened the safety of American passengers
or rights of transit on the Panama Railroad.20
1.1 The Aborted 1903 Hay-Herrn Treaty and the 1903 Hay-BunauVarilla Treaty
One common understanding of the Hay-Herrn Treatys failure is that
Colombian rejection was intended as a stalling tactic until the French
companys contract expired, meaning that the $40 million ($975 million
adjusted to 2007 dollars) meant for the French company would go to
the Republic of Colombia. The unfortunate timing of the Hay-Herrn
Treaty ratification process in the Colombian Senate was that early 1903
was a politically unstable time, coming off of its civil war or Thousand
Days War. A canal treaty was a made to order situation for a political
rival to manipulate critical public opinion against the treaty.21
With the exception of behind the scenes lobbying leading to Congress passage of the Spooner Act of 29 June 1902 authorizing federal funds for an interoceanic canal across Panama there has been
no sequence of events related to the Panama Canal that has excited
such an inordinate amount of scrutiny as that associated with the
Provisional Government of Panamas independence from Colombia
on 3 November 1903 and the drafting and signing of the 1903 HayBunau-Varilla Treaty. A sizable volume of detailed information and
analysis has been expended on every step and misstep in the events
leading to the passage of the 1902 Spooner Act and the 1903 HayBunau-Varilla Treaty, and scholars have certainly availed themselves
of the libraries, archives, and publications of the United States, the
present author included. Elements of some of these issues have been
explored elsewhere, including a guarantee of public order that a Panamanian foreign minister had asked Bunau-Varilla to seek, the false
threat of a Colombian attack on the Isthmus of Panama following the
Panamanian revolt in November 1903, and criticisms that Philippe
20
See Robert Aguirre, Territoriality and commerce: Political conflict over the Panama Canal in geographic perspective (Unpublished Ph.D. dissertation, Louisiana State
University, 1999) for reference. Interpretations offered earlier were completely revised
for this book in light of comparison with other straits.
21
Richard H. Collin, Theodore Roosevelts Caribbean: The Panama Canal, the Monroe Doctrine, and the Latin American context (Baton Rouge: Louisiana State University
Press, 1990), 219220. See also Bergquist (1978, 217218).

Bunau-Varilla did not represent the interests of the Republic of Panama after 3 November 1903.22
There has been great interest in exploring the differences between the
terms of the Hay-Herrn Treaty signed 22 January 1903 but rejected
by the Colombian Senate, and the Hay-Bunau-Varilla Treaty signed
18 November 1903 and ratified by the Committee of Provisional Government of the Republic of Panama (Junta de Gobierno Provisional)
on 2 December 1903. Since the two agreements concerned exactly the
same project in exactly the same location at practically the same time
they should have been identical, but critical historians suggest that the
Hay-Bunau-Varilla Treaty gave much more to the United States than
the Hay-Herrn Treaty.23 Secretary of State John Hay was to have arbitrarily penciled the first important modifications to the Hay-Herrn
Treaty thereby deleting its pledges of sovereignty.24 Hay was then to
have presented his draft proposal to Bunau-Varilla, who penned modifications to Articles I through VII, including the all-important formulation of conditional sovereignty, if it were sovereign, in Article III.25
There are two reasons most often given for the discrepancy between
the Hay-Herrn Treaty and the Hay-Bunau-Varilla Treaty. One reason
was Secretary of State John Hays alleged unwillingness to make pledges
of Panamanian sovereignty unless compelled by necessity. Another
reason was United States negotiating leverage with the Republic of
Panama due to the fact that the United States was protecting Panama
from Colombian military reprisal for its declaring independence on
3 November 1903. There are problems with such a line of thinking, the
most important of which is considering that the Article III conditional
sovereignty clause of Bunau-Varillas counterproposal to donate the
22
Aguirre (1999).
Charles D. Ameringer, Philippe Bunau-Varilla: New light on the Panama Canal
treaty Hispanic American Historical Review 46 no. 1 (1966): 2852. Ameringer (1966,
52) said that Secretary of State Hay noted the Hay-Bunau-Varilla Treaty was vastly
more advantageous to the United States.
24
John Major, Who wrote the Hay-Bunau-Varilla convention Diplomatic History 8 no. 2 (1984): 115123. See also David McCullough, The path between the seas:
The creation of the Panama Canal, 18701914 (New York: Simon and Schuster, 1977,
390).
25
Philippe Bunau-Varilla, Panama: The creation, destruction and resurrection (New
York: McBride, 1913), 368. Miles P. DuVal, Cdiz to Cathay: The story of the long
diplomatic struggle for the Panama Canal, 2nd ed. (New York: Greenwood Press,
1968/1947), 384. See also Miles P. DuVal, And the mountains will move: The story of
the building of the Panama Canal (Stanford: Stanford University Press, 1947).
23
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equivalent of sovereignty to the United States was arbitrarily crafted

by Bunau-Varilla in order to make the treaty irresistible to the administration and to the Senate when the time came for ratification.26
The Article III formulation was not new and similar terms such as
perpetual control of a strip of land can be found in several treaties
and Congressional acts, not to mention the Constitution itself in terms
of powers excluded or reserved to the States. For instance, the Spooner
Act of 1902 authorized both treaties but never clarified the connection
between the use of federal funds and sovereign rights, power and authority. Firstly, the Spooner Act calls for perpetual control of a strip of land:
[T]he President is hereby authorized to acquire from the Republic of
Colombia, for and on behalf of the United States, upon such terms as he
may deem reasonable, perpetual control of a strip of land, the territory
of the Republic of Colombia, not less than six miles in width . . . and the
right to use and dispose of the waters thereon, and to excavate, construct
and to perpetually maintain, operate, and protect thereon a canal. . . . [A]
nd also jurisdiction over said strip and the ports at the ends thereof to
make such police and sanitary rules and regulations as shall be necessary
to preserve order and preserve the public health thereon, and to establish
such judicial tribunals as may be agreed upon thereon as may be necessary to enforce such rules and regulations.27
Nonetheless, the basic terms of Article III were designed to validate

the constitutional powers of the federal government to regulate commerce and use the treasury to construct an interoceanic canal in
foreign territory. Article III was not an arbitrary sovereignty pledge
to guarantee the treatys passage in the Senate. President Roosevelt
already had nearly a two-thirds majority or enough to pass a treaty in
the Senate in 1904, which did not guarantee but at least increased the
likelihood that the Hay-Bunau-Varilla Treaty would be ratified. The
Hay-Herrn Treaty itself was approved by the Senate without amendment on 17 March 1903 by the majority of seventy-three to five. The
same assemblage of Senators that supported the Hay-Herrn Treaty,
the Fifty-Eighth Congress, would also be considering the Hay-BunauVarilla Treaty. The Hay-Bunau-Varilla Treaty eventually passed the
U.S. Senate without amendment on 23 February 1904 by the vote of
sixty-six to fourteen.
26
27
Major (1984, 121).

U.S. Congress (1977b, 178).

2. American Military Intervention in the States Rights Dispute in
November 1903
During his message to Congress on 4 January 1904, President Theodore Roosevelt said that he ordered American vessels to be in ready
positions for a possible secession on the Isthmus of Panama. Roosevelt
said that given foreknowledge of a possible secession, I directed the
Navy Department to issue instructions such as would insure our
having ships within easy reach of the Isthmus in the event of need
arising. As the story is related, Manuel Amadors apparent ability
to solicit an American warship (USS Nashville) in the critical hours
before the 3 November 1903 revolt simply by sending an urgent telegram to Bunau-Varilla emboldened the Panamanian secession movement, even though the USS Nashville had already been given orders
to proceed to Panama and its timely arrival was just a coincidence.28
Roosevelt denied any special knowledge of Panamanian secession saying that it was common knowledge and that he was just as fully aware
as anyone who kept up on public affairs that a Panamanian secession
was a likely possibility.29 In the same speech, Roosevelt also said that
he had specifically counted on Panamanian secession as a third alternative with respect to American interests in an interoceanic canal. The
other alternatives were negotiation with the Republic of Nicaragua over
the San Juan route or another round of negotiations with the Republic of Colombia over the Panama route. Given all three alternatives,
Roosevelt said he supported the Panamanian independence option,
but he denied a direct role in creating Panamanian civil unrest.
As for United States obligations with Colombia, Roosevelt said that
Article 35 of the 1846 Bidlack-Mallarino Treaty bound the United
States to guarantee the sovereignty of Colombia over the Isthmus of
Panama against foreign nations. Roosevelt said that the United States
would no longer consent to be entangled in Colombias internal troubles
28
McCullough (1977, 362364).

See U.S. Congress (1977b, 307). McCullough (1977) describes Philippe BunauVarillas private audience with President Roosevelt prior to the November 1903 revolt
and speculates that Bunau-Varilla interpreted silence as consent when he asked
whether the United States would support an independence movement on the Isthmus
of Panama, an exchange that seems moot in light of Roosevelts message to Congress
in January 1904 stating he was counting on and prepared to take advantage of Panamanian independence.
29
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on account of the inability of authorities in Bogota to maintain order

on the Isthmus of Panama. Roosevelt said:
That our wise and patriotic ancestors, with all their dread of entangling
alliances, would have entered into a treaty with New Granada solely . . . to
continue from Bogota to rule over the Isthmus of Panama, is a conception that would in itself be incredible, even if the contrary did not clearly
appear. It is true that since the treaty was made the United States has
again and again been obliged forcibly to intervene for the preservation
of order and the maintenance of an open transit, and that this intervention has usually operated to the advantage of the titular Government of
Colombia, but it is equally true that the United States in intervening,
with or without Colombias consent, for the protection of the transit,
has disclaimed any duty to defend the Colombian government against
domestic insurrection or against the erection of an independent government on the Isthmus of Panama. . . . It was under these circumstances
that the United States, instead of using its forces to destroy those who
sought to make the engagements of the treaty a reality, recognized them
as the proper custodians of the sovereignty of the Isthmus.30
Roosevelt tried to point out that the purpose behind signing Article
35 was to find the best means to protect the neutrality of the Isthmus
of Panama against hostilities among non-adjacent maritime powers.
Guaranteeing the sovereignty of Colombia over Panama was just a
means to general principles like those agreed upon between the United
States and Britain in the 1901 Hay-Pauncefote Treaty.31 Roosevelt
claimed that the interests of the United States and the interests of
world commerce could be satisfied by a canal under American federal
government control in an independent Republic of Panama willing
to do its share in this great work for civilization.
C. The Two Panamas Under the Republic of Panama
1. The Two Panamas and the Beginning of a States Rights Disputes
with the United States
Though many interpretations simply assume that members of Panamas Committee of Provisional Government like Manuel Amador and
Federico Boyd would have been upset with Bunau-Varillas handling
30
U.S. Congress (1977b, 314316).

It was not until the 20 April 1921 Thomson-Urrutia Treaty that Colombia formally recognized Panamas independence.
31

of treaty negotiations, this does not appear to have been the case.
Bunau-Varilla was never recalled nor officially censured. One historian
who cites a single interview source speculated that Boyd was so angry
at Bunau-Varillas negotiations that he slapped him.32 However, one
of the experts on the Bunau-Varilla papers in the National Archives,
which includes 59 letter boxes and 23 volumes of correspondence,
notes, unpublished manuscripts, maps, press clippings, etc., says that
after signing the exchange of ratifications, Panamanian representatives
like Amador and Boyd cooperated well with Bunau-Varilla. It was
in the United States that the hurry up treaty found its earliest critics, including American newspapers reporting on the role of BunauVarilla and Roosevelts opposition in the Senate.33
Several sources suggest that initial dissatisfaction with the 1903 HayBunau-Varilla Treaty in 1904 was with regard to the ability of Panamanian authorities to impose national taxes, duties, or other charges on
vessels in transit.34 More widespread criticism of the treaty in Panama
developed as a political issue between the maritime-commercial elite
of the Conservative and Liberal parties in Panama during the 1910s
and 1920s, in which Liberals challenged the power of the Conservatives by appealing to elements of Panamas territorial-administrative
society and its non-elite.
D. Conclusion
Territoriality over the environment of Panama and flows through it
during period of the 2nd republic (1870s1930s) before November
1903 was an interaction between a predominantly American preventive posture against any European involvement either public or private
in the canal enterprise, and a maritime-commercial elite in Panama
engaged in a States rights dispute with centralized forms of government in Bogota. The 2nd republic disentangled the United States from
32
McCullough (1977).
Ameringer (1966, 44).
34
See Aguirre (1999) for a discussion of some of McCulloughs (1977) historical
characterizations that tend to overdramatize the relationship between Bunau-Varilla
and members of the Committee of Provisional Government of Panama, in some cases
based on anecdotal evidence. Ameringer (1966) says that the rivalry was between
Bunau-Varilla and Amador, not between Bunau-Varilla and the junta as a whole, who
cooperated well when Amador was not present. Ameringer (1966) says that Amador
and Bunau-Varilla were childish rivals over their importance to Panamanian history.
33
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whatever alliances had existed with Colombia via the 1846 BidlackMallarino Treaty, supported Panamanian independence in November
1903, and then re-entangled the United States into an alliance with
Panamas maritime-commercial society. The 1903 Hay-Bunau-Varilla
Treaty implemented the policy of an American canal under American control at all levels, from day-to-day operation to neutrality. The
United States sent its military forces, upon Panamanian request, to
suppress social and political unrest in Panama on several occasions
often related to elections. American intervention during political elections helped the maritime-commercial elite maintain order in the port
cities against rivals and opposition until at least the 1930s.
CHAPTER NINE
THE EXTRATERRITORIAL EXPANSION OF THE POWERS

OF THE FEDERAL GOVERNMENT OVER THE MARITIME
ENVIRONMENT AFTER THE 1880S
A. Introduction
The policies of the 1st republic (17891832) and the 1st democracy
(18331876) were to avoid conflicts and intrigues across the ocean
in Europe but consolidate territory at home. Coastlines and harbors
were linked to inland territory by natural rivers, artificially-enhanced
rivers, canals, and then railroads that enabled a greater range of travel
and transport into the interior of natural watersheds or across major
continental divides.
Most settled territory in the United States at the beginning of the
1st republic was within the boundaries of Atlantic coastal watersheds.
The territorial enlargement of the United States proceeded over the
rest of North Americas major drainage basins. The Louisiana Purchase (1803) gave the United States the western reaches of the greater
Mississippi River drainage basin including the Missouri River. Next,
Oregon Country was shared with Britain from 1818 until 1846 after
which the United States acquired Oregon Territory, representing the
major portion of the greater Colombia River drainage basin. Texas,
Upper California, and New Mexico were acquired as a result of the
Mexican-American War and the 1848 Treaty of Guadalupe Hidalgo,
which gave the United States the last of the Pacific coastal watersheds
from Oregon Territory to the strategic harbor of San Diego, and the
last remaining interior western reaches of the greater Mississippi River
drainage basin, the Red River and Arkansas Rivers. In order to consolidate its territorial enlargement, the United States federal government greatly expanded its territorial jurisdiction over transportation
improvements including rivers and harbors, canals, transcontinental
railroads, and public highways to the exclusion of the territorial
jurisdiction of the States through which they passed.
The policies of the 2nd republic (1870s1930s) and later policy
regimes like the 2nd democracy (1930s1970s) and 3rd republic
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(1980?) were to avoid conflicts and intrigues across the ocean in

Europe and the rest of the world, but assert territorial control over vast
maritime areas adjacent to the coastline of the United States. During
the 2nd republic, the United States enlarged its maritime domain from
its coastline and natural harbors out into the maritime environment of
the western Atlantic and eastern Pacific. The coast of the United States
was linked with foreign coastlines and harbors by islands, straits, and
sea lanes that enabled a greater range of travel and transport within
seas and gulfs or across major oceans. Where a natural strait did not
exist in Panama one would be created.
The expanded preventive posture of the United States was to deter
European powers from establishing coaling stations near the American coastline or flanking the entrances to the Panama Canal, which
was considered virtually a part of the coastline of the United States.
The preventive posture over the Caribbean and eastern Pacific focused
on three key elements of the physical environment: islands, straits, and
sea lanes used as maritime nodes and links. In some cases, the preventive posture over islands, straits, and sea lanes resulted in the acquisition of former territories of Spain like Puerto Rico, the Philippines, and
Guam; or territories belonging to independent Pacific Islander peoples
like American Samoa or the Hawaiian Islands. In other cases, the preventive posture over nodes and links in the maritime environment
was implemented through extraterritoriality, exclusive arrangements
in perpetuity in which the United States exercised its jurisdiction in
another nations territory, e.g., Guantnamo Bay in Cuba.1
It is impossible to offer any more than a very brief treatment of 20th
century American territoriality over land, sea, and air environments.
Only a few illustrative examples will be cited. However, there are at
least two important comparisons to keep in mind. One comparison is
between the territoriality over inland areas (watersheds) during the 1st
republic and 1st democracy versus territoriality over maritime nodes
and links (islands, straits, and sea lanes) during the 2nd republic and
afterwards. American control over key elements in the environment
1
U.S. Congress, Senate, Committee on Foreign Relations, Panama Canal Treaties:
Hearings before the Committee on Foreign Relations, 95th Cong., 1st and 2nd sess.,
2630 September; 45, 1014, 19 October 1977; and 1920, 2527, 30 January 1978
(Washington, D.C.: GPO, 1977/1978, part 1 250254). See letter from Douglas J. Bennet Jr., Assistant Secretary for Congressional Relations, to John Sparkman, Chairman,
Committee on Foreign Relations, U.S. Senate, 1 November 1977, describing mostly
naval base leases.
the expansion of the federal government
173
changed from a focus on adjacent coasts, rivers, and drainage basins

to non-adjacent islands, straits, and sea lanes.
Another comparison is between the territorial jurisdiction of the
federal government over these key elements of the environment
before and after the beginning of the 2nd republic. By the beginning
of the 2nd republic, as a result of internal consolidation during the
1st democracy, the federal government exercised exclusive territorial jurisdiction over transportation improvements spanning major
continental drainage areas, i.e., the transcontinental railroads, to the
exclusion of the States. The federal government used the same powers
to exercise exclusive extraterritorial jurisdiction over islands, straits,
and sea lanes in foreign territory to the exclusion of foreign sovereign
states through mutual agreement in international treaties.
B. The Extraterritorial Expansion of the Powers of the
Federal Government Over Islands, Straits, and Sea Lanes
During the 2nd republic (1870s1930s)
Captain Alfred Thayer Mahan, an influential advocate of sea power
and a maritime interpretation of the Monroe doctrine, said that as an
inviolable resolution of American policy it should be the case that no
foreign state should acquire a coaling station within three thousand
miles of San Francisco, which included the Hawaiian and Galapagos
Islands as well as the Pacific Coast of Central America (see Figure 16,
which depicts the current territorial waters of the United States, buffer
zones around San Francisco and Panama, and world ports displayed by
the size of their harbors).2 Mahan even calculated that based upon the
range of endurance of warships from European ports into American
waters, the Monroe doctrine need apply no further south in the western Atlantic than the Amazon River basin. It is telling that advocates
of the Panama Canal like Mahan adhered to the general principle in
the 1850 Clayton-Bulwer Treaty and the 1901 Hay-Pauncefote Treaty
that no one nation should deny use of the Panama Canal itself to any
other nation. But these advocates did not adhere to the same policy
when it came to the free and neutral use of strategic harbors, coaling
stations, straits, and sea lanes leading to the Panama Canal.
2
Adams (1974, 136 n. 52). See also Alfred Thayer Mahan, The interest of America
in sea power, present and future (Boston: Little, Brown and Company, 1903), 26.
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In The Panama Canal & sea power in the Pacific: An original study
in naval strategy, Mahan believed that advocates of the Panama Canal
did not separate its use for commercial welfare from its use for common defense, like any highway built at public expense.3 So what was the
Panama Canal really built to do? What was the purpose of involving
the federal government in building and operating the Panama Canal?
Was the canal built for commercial convenience or military necessity?
Several authors emphasize the impact of American economic crises
like the depression of the 1890s on a bundle of foreign and domestic
policies to increase American exports, generally called the solution
of overseas expansion.4 Yet in a message to Congress on 8 March
1880, President Rutherford B. Hayes said that it was not merely
the United States commercial interests that justified the policy of the
United States for a canal under American control. In his message to
Congress on 4 January 1904 transmitting the 1903 Hay-Bunau-Varilla
Treaty, President Theodore Roosevelt said that matters of commercial convenience had been replaced by necessity, given the territorial
enlargement of the United States in the Caribbean and the Pacific as a
result of the Spanish-American War of 1898.5
The answer is probably that the Panama Canal was built in expectation of both commercial and military uses. Historically speaking,
both expectations were correct and the Panama Canal served both
purposes. But the measurable high points in the Panama Canals military and commercial utility occurred at different times. The Panama
Canals relative military advantages peaked during the period of the
2nd republic, then declined during the period of the 2nd democracy, especially after World War II. The Panama Canals commercial
advantages would probably not have been immediate even had it been
built during the 1880s. In fact, foreign waterborne transits through the
3
Alfred Thayer Mahan, The Panama Canal and sea power in the Pacific (Albuquerque: American Classical College Press, 1977), 16.
4
See Walter LaFeber, The American search for opportunity, 18651913 (Cambridge:
Cambridge University Press, 1993); Walter LaFeber, The new empire: An interpretation of American expansion, 18601898 (Ithaca: Cornell University Press, 1963); William A. Willams, The roots of the modern American empire: A study of the growth and
shaping of social consciousness in a marketplace society (New York: Random House,
1970); Richard F. Bensel, Sectionalism and American political development, 18801980
(Madison: University of Wisconsin Press, 1984); John A. Agnew, Place and politics:
The geographical mediation of state and society (Boston: Allen and Unwin, 1987).
5
U.S. Congress (1977b, 315316).
175
Panama Canal did not experience any significant increase until after
World War II.
1. Nodes and Links Built to Generate Commercial Wealth
The solution of overseas expansion was designed to expand foreign
export markets for American goods as a remedy for domestic overproduction or other factors contributing to cyclic economic depressions.
An interoceanic canal would have been indispensable to the export of
American finished or raw products from the Atlantic to markets in East
Asia, or from the Pacific to markets in Europe. Government-sponsored
reports about the commercial utility of the Panama Canal correlated
distance saved between ports with increases in foreign trade, based on
simplifying assumptions not unlike some of the assumptions about
social saving.6 Decreasing the distance to be traveled to foreign markets was expected to increase the market share of American exports.
Indirect advantages of the Panama Canal were also expected to include
a reduction in transcontinental freight rates due to competition.
Had the Panama Canal been completed before 1914, can one speculate what the increase in foreign exports would have been as a result?
Trade and foreign investment in East Asia were modest in comparison
with Europe and the rest of North America. For example, between
1850 and 1905, less than five percent of all American exports by value
were delivered to East Asia. American exports to Europe and the rest
of North America including Canada, Mexico, the Caribbean, and Central America represented the major market for American products and
consistently accounted for about ninety percent of all exports between
1850 and 1915. Mexico, Canada, Europe, Caribbean Island nations,
and northern South America accounted for nearly ninety percent of all
United States foreign direct and portfolio investments between 1897
and 1935.7 Likewise, East Asia accounted for about seven to ten percent of American private foreign investment, but did not experience
any increase between 1897 and 1935. However, foreign investment
overseas accounted for only about one percent of all American private
6
Emory R. Johnson, Panama canal traffic and tolls (Washington, D.C.: GPO, 1912)
and Emory R. Johnson, Measurement of vessels for the Panama Canal (Washington,
D.C.: GPO, 1913).
7
Cleona Lewis, Americas stake in international investments (Washington, D.C.:
The Brookings Institution, 1938) breaks American private foreign investments in 13
categories of direct and 5 categories of portfolio investment, by geographic division.
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investment between 1869 and 1897, and did not affect the average rate
of return.8 From 1900 to 1929, foreign investment increased to six percent of all American private investment, but by comparison American
private investment in the rest of the world was still less than in the
State of California alone.
All this does not necessarily suggest that there was not a conscious
policy or solution of overseas expansion designed to increase American exports in order to solve economic depressions like that of the
1890s. Perhaps the policies were premature until after the end of the
Great Depression and the peace following World War II? Perhaps other
market forces or even non-market forces such as eliminating import
duties, or the collapse of European production after World War II,
were more important when it came to increasing American exports to
foreign markets than marginally reducing shipping time and associated logistical costs? In any event, between the opening of the Panama
Canal in 1914 and World War II, flows through the Panama Canal
measured by tonnage remained completely flat and two-thirds of all
flows were vessels transporting goods coastwise between the Atlantic
and Pacific coasts of the United States.
2. Nodes and Links Built to Gain Military Advantage
By the beginning of the 2nd republic, the speed, range, and destructive power of European naval forces was increasing dramatically.
Industrialized European nations were capable of building naval forces
constructed of steel, powered by steam engines using coal as fuel, and
carrying projectile weapons with a much longer range and greater
destructive force. Plans for building and operating the Panama Canal
coincided with this era of industrialized European naval power.
The preventive posture of the United States over the maritime environment during the 2nd republic focused on islands, straits, and sea
lanes that could be built up as maritime nodes and links between European home ports and American waters. Firstly, by denying strategic
coastal and island coaling stations to European maritime powers in the
western Atlantic and the eastern Pacific, the United States could hamper European naval capabilities to sustain operations against attractive targets on the American coast. Secondly, by constructing a naval
8
Stanley Lebergott, The returns to US imperialism, 18901929 Journal of Economic
History 40 no. 2 (1980): 229252. See especially Lebergott (1980, 231 n. 8).
177
force with a range and destructive power equal to European navies,

the United States would be prepared to engage European battleships
further out on the high seas and deny them use of straits and sea lanes
to the coast of the United States. It is a universal principle of warfare
that there is a culminating point of victory or attack far from ones
home base.9 Preventing European navies easy access to nodes and
links across the vast maritime environment of the western AtlanticCaribbean or the eastern Pacific, and forcing them to resupply over
longer and longer distances using colliers and foreign coaling stations,
would increasingly give the advantage to United States naval forces as
they operated closer and closer to American forward naval bases like
Guantnamo in Cuba or Pearl Harbor in the Hawaiian Islands.
2.1 Preventing European Territorial or Extraterritorial Control over
Nodes and Links Near American Waters
There are no concise statistical surveys on the range of endurance of
coal-burning battleships.10 However, a few representative sources of
information about the range of endurance of coal battleships during
the last two decades of the 19th century and the first two decades of
the 20th century lend insight about the logistical demands of sending a fleet of warships from Europe into Caribbean or eastern Pacific
Ocean waters.
Many vessels during the era of the coal-burning warship combined
the use of sails and coal because their steam-powered engines were
not efficient enough for long distances. A German, French, British, or
Spanish coal-burning battleship en route to the Western Hemisphere
from its homeports in Europe had sufficient range to make Caribbean waters at a normal operating speed but that would be about it.
The range of endurance of a ship depended on the capacity of the
ship to store coal in its bunkers or on deck, the coals burning quality,
the number of boilers that were operating, and the ships speed. The
relationship between range and speed was such that as the average
9
Michael I. Handel, Masters of war: Classical strategic thought (London: Frank
Cass, 1996).
10
Navy Department Library, e-mail to author, 2005. However, see Frank M. Bennett, The steam navy of the United States: A history of the growth of the steam vessel
of war in the U.S. Navy, and of the Naval Engineer Corps (Westport, CT: Greenwood
Press, 1972/189697). See also Donald L. Canney, The old steam navy. 2 vols. Volume
1: Frigates, sloops, and gunboats, 18151885. Volume 2: Ironclads, 18421885 (Annapolis, MD: Naval Institute Press, 1990).
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speed of a battleship increased, its range of endurance would exponentially decrease. For instance, the distance from Hamburg to Coln
via the Anegada Passage through the Virgin Islands was 5,109 nautical miles. The German warship Moltke launched in April 1910 had an
operational range of anywhere between 3,000 and 4,000 nautical miles
depending on whether it averaged 14 or 15 knots.11 At greater speeds,
its range would decrease. By comparison, most major warships of the
United States fleet had an operational range in the neighborhood of
4,000 nautical miles, which they could cover in two weeks of continuous steaming as long as they maintained a speed of ten knots.12
By the period of the Spanish American War in 1898, if onshore
coaling stations were not available then collier vessels were necessary
to accompany warships, as in the case of the voyage of the Great White
Fleet between 1907 and 1909. Supplying coal for American fleet operations in the Caribbean alone required hundreds of thousands of tons
of coal on a monthly basis.13 Not only were the logistics of supplying
distant coaling stations to extend the range of battleships a challenge
but re-fueling a single naval vessel, accomplished mostly by hand, was
a task in-itself. Around 1904, coaling at sea under less than optimal
conditions was challenging and fleet operations were circumscribed in
radial patterns around secure coaling bases.14
Several government memos suggest the importance that the range
of endurance of European coal-burning battleships played in American preventive policies. For instance, a 12 November 1901 memo by
Admiral George Dewey said that careful investigation of the radius
of coal endurance of foreign battleships showed that virtually the
utter most reach of German men-of-war from their own ports, on a
single supply of coal, in the direction of the proposed isthmian canal,
11
John H. Maurer, Fuel and the battle fleet: Coal, oil, and American naval strategy,
18981925 Naval War College Review 34 (1981): 6077. Maurer (1981, 67) suggests
the Moltke had a range of 3,000 nm traveling at 15 knots, and Staff (2006) suggests
4,120 nm at 14 knots.
12
See Mark Hayes, War plans and preparations and their impact on U.S. naval
operations in the Spanish-American War, Paper presented at Congreso Internacional
Ejrcito y Armada en El 98, 1999 (http://www.history.navy.mil/wars/spanam.htm), for
a brief explanation in the context of the Spanish-American War 1898.
13
Maurer (1981, 61) cites a 1912 study of the United States Navy estimating that
the mobilization and concentration of the American fleet in the Caribbean would
require a total of 300,000 tons of coal initially and another 150,000 tons per month
afterwards.
14
Maurer (1981, 6162).
179
is in the neighborhood of Haiti or St. Thomas.15 Dewey speculated

that the fact Germany was deeply interested in Haiti was because
of the German desire to establish a secure coaling station for its naval
forces on a route through the Panama Canal.16 Another October 1902
memorandum from the Navy General Board to Secretary of State John
Hay pointed out the aggressive situation that had developed around
the Mediterranean entrance to the Suez Canal by Germany and Britain, both of whose strategic interests depended on Suez Canal transits.
The Navy General Board speculated about British and German intentions to extend their control and influence in Egyptian territory and
flanking territories like Cyprus and Syria, to protect their own transits
or harass other nations transits through the Suez Canal. The Navy
General Board letter declared that with a view toward preventing like
aggressive action against Colombia and the United States, the Republic of Colombia should cooperate with the United States in preventing
any European power from controlling territory near the flanks of the
Panama Canal as requested.17
American preventive postures over strategic nodes in the maritime
environment were not limited to the eastern or Caribbean flank of
the Panama Canal. For instance, on 24 June 1910 a bill was published
by the Ecuadorian Senate intending to lease the Galapagos Islands to
a German-French syndicate, allegedly for three million dollars and
a guarantee of Ecuadors sovereignty. A week later on 1 July 1910,
Assistant Secretary of State Beekman Winthrop wrote to Secretary of
State Philander C. Knox that all possible steps should be taken to prevent any foreign powers, either directly through their governments or
indirectly through their citizens, from obtaining coaling stations and
possibly military bases at either of these places or at any other place
on the flanks of the trade routes to the Panama Canal.18 Two weeks
later on 16 July 1910, Assistant Secretary of State Wilson wrote to the
American Ambassador in Berlin with instructions to state American
opposition to German interests on the Galapagos Islands, saying that
the government of the United States held it would be a menace to this
country if any European power were to obtain a base at the Galapagos
15
See Peter Overlack, German War Plans in the Pacific, 19001914, The Historian
60 no. 3 (1998): 579594.
16
Cited in Adams (1974, 1556).
17
18
180
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Islands or at any other point affording special strategic advantages as

regards the Panama Canal.19
The Roosevelt corollary to the Monroe doctrine was delivered in
Roosevelts 6 December 1904 message to Congress. Its ostensible
purpose was to prevent the circumstances by which foreign powers
might take advantage of political instability or national debt in Latin
American nations in order to interfere with their governments. The
corollary itself denied American interest in annexing territory but said
that the United States would preemptively interfere in the affairs of
Latin American governments as a last resort in order to prevent the
conditions in which interference by powerful European governments
became likely. In his 1904 message to Congress, Roosevelt said:
It is not true that the United States feels any land hunger or entertains
any projects as regards the other nations of the Western Hemisphere
save such as are for their welfare. All that this country desires is to see
the neighboring countries stable, orderly, and prosperous. . . . If a nation
shows that it knows how to act with reasonable efficiency and decency
in social and political matters, if it keeps order and pays its obligations,
it need fear no interference from the United States. Chronic wrongdoing, or an impotence which results in a general loosening of the ties
of civilized society, may in America, as elsewhere, ultimately require
intervention by some civilized nation, and in the Western Hemisphere
the adherence of the United States to the Monroe Doctrine may force
the United States, however reluctantly, in flagrant cases of such wrongdoing or impotence, to the exercise of an international police power. . . .
We would interfere with them only in the last resort, and then only if
it became evident that their inability or unwillingness to do justice at
home and abroad had violated the rights of the United States or had
invited foreign aggression to the detriment of the entire body of American nations. . . . Ordinarily it is very much wiser and more useful for us
to concern ourselves with striving for our own moral and material betterment here at home than to concern ourselves with trying to better the
condition of things in other nations. . . . Nevertheless there are occasional
crimes committed on so vast a scale and of such peculiar horror as to
make us doubt whether it is not our manifest duty to endeavor at least to
show our disapproval of the deed and our sympathy with those who have
suffered by it.
Roosevelt offered moral grounds for political intervention, e.g., manifest duty in the event of a peculiar horror or crimes on a vast scale.
19
Cited in Adams (1974, 2001). See (Adams 1974, 1523) on the importance of
Germany.
181
However, political intervention for the common defense of the United

States would also be justified on strategic grounds in order to prevent European nations from executing maneuvers like trading a Latin
American governments debt for an exclusive lease to a coaling station
or a naval base in Caribbean waters.
For example, on 2 June 1908 Secretary of State Elihu Root wrote in
a memo to Roosevelt that the construction of the Panama Canal gave
special importance to Roosevelts corollary to the Monroe Doctrine.
Root stated that the building of the Panama Canal made it important that there shall be no hostile control of the route between our
great Atlantic and Pacific ports and the Isthmus, and stated that it
was of special importance to the interests of the United States that
the nations of the Caribbean Sea maintain independent, peaceful and
prosperous governments such that they would not be vulnerable to
European extraterritorial control.20
2.2 Acquiring Exclusive Territorial and Extraterritorial Control over
Nodes and Links in American Waters
To prevent island possessions of Spain or other islands in the North
Atlantic and Caribbean from falling into the hands of more powerful
European nations the United States would assert and exercise either
territorial or extraterritorial control, through annexation as a result
of war or exclusive leases of naval stations in foreign territory. Not
including the Straits of Florida or the Yucatan Channel in the Gulf of
Mexico, there are nine narrow natural deepwater passages for vessel
traffic from the North Atlantic to enter the Caribbean Sea and transit
the Panama Canal. The three most important of these straits for vessels
en route to the Panama Canal from the Atlantic coast of the United
States or from any ports in Europe include the Windward Passage
(Cuba and Haiti), the Mona Passage (Dominican Republic and Puerto
Rico), and the Anegada Passage (U.S. and British Virgin Islands).
As a result of the 1898 Treaty of Paris that ended the Spanish-American War, Spain renounced its territorial control over Cuba (adjacent
to the Windward Passage), Puerto Rico (adjacent to the Mona Passage), and Guam to the United States. Spain also agreed to sell the
Philippine Islands to the United States for $20 million ($500 million 2007 adjusted dollars). The 1898 Treaty of Paris that ended the
20
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Spanish-American War was approved by a heavily-divided Senate on

6 February 1899 by a vote of 57 to 27, with only one vote more than
the required two-thirds majority. Nonetheless, Cuba was required by
the 1898 Teller Amendment to become an independent nation and
American troops withdrawn, under certain conditions.
One of the conditions for withdrawal outlined in the 22 May 1903
Platt Amendment required that Cuba not permit any foreign power
or powers to obtain by colonization or for military or naval purposes
or otherwise, lodgement in or control over any portion of said island.
The Platt Amendment also stated that Cuba agreed to lease of lands
necessary for coaling or naval stations, which was eventually sited
at Guantnamo Bay adjacent to the Windward Passage. Besides the
Windward Passage and the Mona Passage, the only remaining strategic Caribbean strait that was not adjacent to a United States territory
or naval station at the time of the opening of the Panama Canal in
1914 was the Anegada Passage between the British Virgin Islands and
the Danish islands of St. John, St. Thomas, and St. Croix. Fearing that
Germany would take possession of Denmarks claims and establish a
submarine base during World War I, the United States purchased the
islands from Denmark and took possession on 31 March 1917, renaming them the United States Virgin Islands (see Figure 16).
In its famous trek during the Spanish-American War, the U.S.S.
Oregon departed from San Francisco on 19 March 1898 and arrived at
Key West on 26 May 1898 after traveling 14,064 knots around South
America. Many observers highlight the speed with which the Oregon
would have made the journey had the Panama Canal link existed,
without also considering the support structure of nodes and links.
The Oregon had to make six foreign port calls in four different countries, none of which were naval stations under American control and
defense.21 Consider the territorial gains of the Spanish-American War
in the far western Pacific. The route for an American warship in 1920
leaving from New York City to the Philippines to Manila would have
to travel a distance of 11,364 nautical miles. The route for the same
21
Stops included coaling stations at Callao (Peru), Port Tomar and Punta Arenas
(Chile), Rio Janeiro (Brazil), Bahia (Brazil), and Barbados. The total cost of this single
voyage, approximately half of which was for the coal consumed, amounted to $98,253
in 1898 ($2.5 million in adjusted 2007 dollars). See U.S. Congress, Senate, Armed vessels, tenders, and war ships sent to the philippines, etc., 56th Cong., 2nd sess., Doc. No.
22 (Washington, D.C.: GPO, 1900).
16. Extraterritorial buffer zones and expansion during the 2nd republic (1870s1930s)

183
184
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American warship in 1920 leaving from New York City to the Philippines along the shortest route via the Suez Canal would have to travel
a distance of 11,521 nautical miles. In other words, the two routes were
practically the same and there was little distance advantage to using
the Panama Canal. However, the same American warship cruising to
Manila through the Panama Canal could make three stops at American naval bases in Panama, Hawaiian Islands, and Guam on its way
to the western Pacific Ocean and travel a distance of 11,540 nautical
miles. The route east through the Suez Canal would require the American warship to resupply at foreign coaling stations the entire way.
The United States acquired several exclusive leases or annexed territory in the central Pacific Ocean, all within approximately five to
six thousand nautical miles of the Panama Canal. Treaties between
the United States and Hawaii in 1849 established a base of relations,
emphasizing that neither the United States nor European powers would
acquire exclusive privileges. A lease for a naval base on the Hawaiian
Islands was signed in a treaty with the Hawaiian Kingdom in 1875,
to which an amendment was added in 1887 granting exclusive rights
to the United States. The treaty stated, His Majesty the King of the
Hawaiian Islands grants to the Government of the United States the
exclusive right to enter the harbor of Pearl River in the Island of Oahu,
and to establish and maintain there a coaling and repair station for
the use of vessels of the United States.22 The Hawaiian Islands were
annexed to the United States during the Spanish-American War.
For a naval base in the southern Pacific Ocean, Secretary of State
John Hay signed the Tripartite Convention in 1899 with Baron Theodor von Holleben, German ambassador to the United States, and Sir
Julian Pauncefote, British ambassador to the United States, which partitioned the Samoan islands among the three maritime powers. Finally,
in the northern Pacific Ocean, a 26 May 1903 New York Times article
reported that Admiral George Dewey had recommended immediate
establishment of a coaling station at Dutch Harbor, Alaska forming
the fifth in the chain of coal depots along the Pacific Coast, which
will begin at San Diego and include San Francisco, Puget Sound, and
22
See Department of the Navy, History of the Fourteenth Naval District and the
Hawaiian sea frontier, Vol. 1 (Honolulu: Historical Section, Fourteenth Naval District,
1945, (http://www.history.navy.mil/docs/wwii/pearl/hawaii.htm).
185
Sitka, further noting that Honolulu was the sixth and possibly others
like Guam to be added (see Figure 15).
At the same time that the United States was preventing European
control over islands, straits, and sea lanes near American waters, the
Navy was preparing to build a new fleet. The 30 June 1890 Navy Bill
authorized construction of three battleships that along with a fourth
became the center of a new fleet capable of challenging European
naval forces for control of the high seas far off the coastline of the
United States. The Navy also experimented with oil fuel vessels as early
as 1897 and by 1911 it had developed its first fuel oil warships, the
Nevada-class.23 A 29 May 1920 letter from Secretary of the Navy Josephus Daniels to Senator Carroll S. Page of the Senate Naval Affairs
Committee marked the year 1913 as the date for an important shift
in American naval thinking away from a coal-driven battle fleet and
towards a fuel oil-drive fleet.24
With the development of more efficient engine propulsion systems
using liquid oil fuel, the nodes and links for projecting naval force
changed.25 Oil fuel had twice the thermal capacity of coal. For any
given weight an oil-driven warship could travel twice as far as a coaldriven warship. A warship using oil fuel could refuel at sea even in
rough conditions and in less time using pumps to move fuel between
ships and also move fuel around once on board. Finally, sources of oil
fuel were just as abundant on the Pacific coast of the United States as
they were on the Atlantic and Gulf coast, which had not been the case
with coal.
One author feels that the declining military significance of the Panama Canal, a structure built to fulfill sea power, was due to the role
that Canal Zone air bases eventually played for the protection of the
continental United States.26 During the period of the 2nd democracy,
nodes and links for aerospace environments such as air bases or forward radar stations became more of a military asset for the United
States in and around the Panama Canal and Canal Zone than its use
23
Maurer (1981, 70).

U.S. Congress, House, Committee on Naval Affairs, Fuel-oil investigation, 66th
Cong., 2nd sess., Committee Serial No. 189 (Washington, D.C.: GPO, 1920).
25
See Maurer (1981, 70).
26
John Major, Wasting asset: The US re-assessment of the Panama Canal, 1945
1979 Journal of Strategic Studies 3 no. 2 (1980): 123146.
24
186
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for transits of warships. Even aircraft carriers eventually became much

too large to transit the Panama Canal.
I would argue that advances in the technology of naval power using
oil-fuel had begun to diminish the Panama Canals military usefulness
much earlier, in fact, before it even unofficially opened in August 1914.
After the strategic decision was made to switch from coal to oil fuel
by the United States Navy in 1913, the Panama Canal was effectively
no longer a supreme military asset for the United States. In other
words, in 1904 the canal would have represented the state-of-the-art
for naval force projection. But because of significant improvements in
propulsion systems based on oil fuel in the interim between 1904 and
1914, by the time the Panama Canal was actually completed its relative
strategic importance was not what it had been.
C. Conclusion
The policy of the United States in the 1850 Clayton-Bulwer Treaty
and preserved to some extent by the 1901 Hay-Pauncefote Treaty was
that no government would through threat of force or any other means
deny free use of the Panama Canal to another government. The same
did not apply for the islands, straits, and sea lanes flanking the Panama Canal. The Panama Canal was the only neutral and free part of a
network of strategic maritime nodes and links in the Caribbean and
eastern Pacific Ocean under American control.
There are similarities between the preventive posture of the 2nd
republic over islands, straits, and sea lanes, and the preventive postures
of later policy regimes over similar elements in near-shore maritime
and aerospace environments. The scale and complexity of American
territoriality was compelled to change depending on how territorial
or extraterritorial control of nodes and links through three-dimensional high seas and aerospace environments could be used by the
United States or its enemies to either attenuate or enhance the projection of deadly force given more advanced technology.
The policy regime of the 2nd democracy (1930s1970s) sought to
prevent industrializing nations in Europe and Asia and particularly
expansionist regimes in Germany, Japan, and Russia from interfering in the affairs of Latin American governments for the purpose of
establishing covert bases or airstrips that could enhance the range
of naval vessels, submarines, aircraft, or ballistic missiles for opera-
187
tions in American waters and airspace. The policy regime of the 3rd
republic (1980?), the era of the Reagan Revolution and Conservative
Centrism, sought to stem the influence of the Soviet Union in client
states like Cuba over airstrips or covert bases that could enhance the
range of warplanes or missiles in North American waters and airspace.
After the collapse of the Soviet Union in 1989, the regime of the 3rd
republic shifted its focus to sub-state and non-state actors including
state-supported terrorist organizations training insurgents in Central
America; non-state terrorist organizations attempting to transport
hidden weapons of mass destruction into American waters and airspace; or even foreign state-supported corporations maneuvering to
own and operate key nodes and links in the United States maritime
or aerospace infrastructure.
CHAPTER TEN
THE PANAMA CANAL AND THE TWO PANAMAS

UNDER THE 2ND REPUBLIC (1870S1930S) AFTER
PANAMANIAN INDEPENDENCE
A. American Extraterritoriality through the 1903
Hay-Bunau-Varilla Treaty
There were 20 different bilateral agreements between the United States
and the Republic of Panama during the 2nd republic (1870s1930s)
after Panamanian independence in 1903, including the 1903 HayBunau-Varilla Treaty.1 Treaties covered topics such as Canal Zone
boundaries, extradition, legal tender and silver coinage, transits of
United States troops and neutrality during World War I, claims for
damages during the 1915 riot, smuggling of alcohol during Prohibition, and other matters of jurisdiction and the sovereign authority. The
only important modification to the 1903 Hay-Bunau-Varilla Treaty
during the time of the 2nd republic was the 3 December 1904 Canal
Rights treaty, otherwise known as the Taft Agreement.
Article III of the Hay-Bunau-Varilla Treaty allowed the United
States to exercise all the rights, power, and authority of sovereignty to
the entire exclusion of any such exercise by the Republic of Panama.2
The ever-quoted Article III of the Hay-Bunau-Varilla Treaty reads:
The Republic of Panama grants to the United States all the rights, power
and authority within the zone mentioned and described in Article II of
this agreement and within the limits of all auxiliary lands and waters
mentioned and described in said Article II which the United States
would possess and exercise if it were the sovereign of the territory within
which said lands and waters are located to the entire exclusion of the
exercise by the Republic of Panama of any such sovereign rights, power
or authority.
Treaties between the United States and Republic of Panama from November 1903
to the present are available through the online database HeinOnline (http://heinonline
.org).
2
U.S. Congress (197778).
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The Fifth Circuit Court in New Orleans in 1940 explained that Article
III of the 1903 Hay-Bunau-Varilla Treaty gave the United States the
greatest possible jurisdiction in the Panama Canal Zone, without
actually ceding the area to this country.3 There have been many interpretations of Article III but the last sentence to the entire exclusion
sounds like a federal governments assertion of power over a State.
B. The Panama Canal and Canal Zone
1. The Canal Buffer Zone
1.1 An Extraterritorial Five-Mile Wide Buffer Zone around the Line
of the Panama Canal
The Canal Zone was established as a five-mile buffer zone around the
center line of the Panama Canal within which the United States federal
government could exercise its constitutional powers to the exclusion of
sovereign rights exercised by the Republic of Panama (see Figure 17).
The United States federal government exercised its constitutional powers within the Canal Zone not by virtue of the fact that the Canal
Zone was a territory of the United States, but by virtue of the promises
exchanged in the 1903 Hay-Bunau-Varilla Treaty.
As a physical transportation infrastructure, the Panama Canal and
its five-mile-wide buffer zone are comparable to the territorial system
used by the federal government over the transcontinental railroads,
but with two important differences. One difference was that the territory through which the canal line passed was not that of a State or
Territory of the United States but foreign territory. Another difference was that the Panama Canal was not a self-contained transportation infrastructure in the same way as a railroad. Goods, passengers,
finances, and messages in transit on a railroad are conveyed in rail
cars guided by a single track owned and operated by the railroad company and under the jurisdiction of a sovereign state all the way from
their origin to the destination. Goods, passengers, finances, and messages in transit through the Panama Canal are conveyed in vessels that
choose to pay a toll to transit through the Isthmus of Panama using
the Panama Canal but the rest of the voyage follows sea lanes or high
seas owned by no one.
U.S. Congress (197778, 1:622).
191
17. The Panama Canal and Canal Zone in 1938
the panama canal under the 2nd republic
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It took a major momentum shift between the policy regimes of the

1st democracy and the 2nd republic to establish the policy that there
would be an American canal under American control. However, it
only took six documents between November 1901 and May 1904 to
legally authorize and implement the policy of a canal under American
control. First was the 1901 Hay-Pauncefote Treaty between the United
States and Britain, signed 18 November 1901 and entered into force
on 21 February 1902, abrogating the 1850 Clayton-Bulwer Treaty and
agreeing that a canal could be constructed and operated by the United
States federal government. Second was the Spooner Act or An act to
provide for the construction of a canal connecting the waters of the
Atlantic and Pacific oceans, approved by Congress on 28 June 1902.
The third document was the Hay-Bunau-Varilla Treaty between the
United States and the Republic of Panama, signed on 18 November
1903. The Hay-Bunau-Varilla Treaty was ratified by the Republic of
Panama on 2 December 1903, ratified by United States Senate 23 February 1904, and finally entered into force on 26 February 1904.
The fourth set of documents certified the sale and transfer of canal
properties to the United States from the New French Panama Canal
Company, a purchase authorized by the 1902 Spooner Act. Sale of the
company was authorized by its stockholders for $40,000,000 on 23 April
1904, and on 4 May 1904 an officer of the U.S. Army Corps of Engineers
in Panama was instructed by the Attorney General of the United States to
take possession of all New French Canal Company properties. The fifth
event or set of documents authorized receipt of payment of $10,000,000
by the Republic of Panama as per the terms of the Hay-Bunau-Varilla
Treaty, which was paid sometime before the United States took possession of the New French Canal Companys properties on 4 May 1904. The
sixth and last document was an executive order from President Roosevelt
placing the Isthmian Canal Commission in charge of establishing a government for the Canal Zone. On 9 May 1904, Roosevelt through Secretary of War William H. Taft and in accordance with the Spooner Act
and the Hay-Bunau-Varilla Treaty issued the executive order for a Canal
Zone government. Also as part of the establishment of the Canal Zone
government, on 24 June 1904 Secretary of War Taft issued instructions
for the Isthmian Canal Commission to establish ports, tariffs, custom
houses, and post offices in the Canal Zone to the exclusion of similar
offices of the government of the Republic of Panama.4
4
U.S. Congress (1977b, 411415).
193
2. Canal Zone Governance

2.1 A Bill of Rights
The Canal Zone government was authorized by Congress in the
Spooner Act and put under the executive authority of the President
and one of his Cabinet, i.e., the Secretary of War. The act stipulated a
bill of rights and a legislative, executive, and judicial branch. The three
branches of Canal Zone government were staffed by a paid professional workforce of Americans recruited from the United States, and
an immigrant manual labor force recruited from the Caribbean and
the Mediterranean.
The 1904 Spooner Act also stated that all the military, civil, and
judicial powers in the Canal Zone were to be exercised by a government directed by the President for the purpose of maintaining and
protecting the inhabitants thereof in the free enjoyment of their liberty, property, and religion. Panamanians or other foreign nationals resident in the Canal Zone itself were not considered American
citizens, since the territory of the Canal Zone was not the sovereign
territory of the United States, but they were considered to be under
special United States jurisdiction. Roosevelt sent instructions to Taft in
a 9 May 1904 letter to implement the Spooner Act, stating that the law
of the land already familiar to inhabitants of newly demarcated Canal
Zone territory or other places under United States jurisdiction just
after the time of the Hay-Bunau-Varilla Treaty entered into force on
26 February 1904 would remain in force. However, Roosevelt added
that there were certain great principles of government . . . essential to
the rule of law and the maintenance of order, which was the Canal
Zone bill of rights. In other words, the Canal Zone government would
comply with section one of the Fourteenth Amendment to the Constitution that no State shall make or enforce laws that abridge individual
rights or the life, liberty, or property of United States citizens or those
subject to its jurisdiction without due process, nor shall any State deny
any person within its jurisdiction equal protection of the law.
However, in Roosevelts letter to Taft the emphasis was not on protecting its residents against the tyrannies of a Canal Zone government. The
Canal Zone bill of rights was, according to Roosevelt, essential to the
rule of law and maintenance of order. In other words, the bill of rights
focused on matters of due process necessary in order to maintain order
and reduce risks to public health and public safety. The Isthmian Canal
Commission had the power to legislate and set rules, enforced through
the executive and judicial arms of the Governor of the Canal Zone,
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including the power to exclude from time to time anyone not resident in
the Canal Zone at the time of 26 February 1904. The Commission could
exclude anyone they believed would create public disorder, endanger
public health, or in any way impede canal operations and its workforce.
A number of examples are given, including peculiar turn of the century
terms such as idiots, the insane . . . persons afflicted with loathsome or
dangerous contagious diseases; those who have been convicted of felony,
anarchists, those whose purpose it is to incite insurrection.
It is not a stretch of the imagination to infer that the priority in the
Isthmian Canal Commissions powers were to establish its authority
to reject the unwelcome elements among its potential incoming Caribbean black and Mediterranean immigrant manual labor workforce.
The examples given by the Isthmian Canal Commission for those who
might create public disorder, endanger public health, or in any way
impede canal operations and its workforce were specifically followed
by the phrase, and may cause any and all such newly arrived persons
of those alien to the Zone to be expelled and deported from the territory controlled by the United States.
Anyone with a passing familiarity of the first ten amendments to the
United States Constitution might note several omissions in the Canal
Zones version of the bill of rights. One might also note the addition
of prohibitions against government bills of attainder and ex post facto
laws from Article I of the Constitution. The Canal Zones enumeration
of its bill of rights was not supposed to be a direct copy of the first
ten amendments to the Constitution. In 1979, the United States Fifth
Circuit Court of Appeals ruled that the Canal Zone government was
statutory and not constitutional. Since the United States occupied the
Canal Zone but did not own it the 1904 Canal Zone bill of rights, and
not the 1791 Bill of Rights of the United States Constitution, was the
only bill of rights that really mattered in the Canal Zone.
Discrepancies and omissions between the Constitutions Bill of
Rights and the Canal Zone bill of rights include the omission of the
Second, Third, Seventh, Ninth, and Tenth Amendments, as well as
portions of the Fourth, Fifth, and Sixth Amendments. The pattern in
discrepancies and omissions seems to be that individual civil rights
were not guaranteed if they posed a risk to public health or public
safety. For example, there is no right of residents of the Canal Zone to
keep and bear arms (Second Amendment). Perhaps the most interesting omission from the point of view of Panamas long States rights
dispute is the Tenth Amendment, that the powers not delegated to
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the United States by the Constitution, nor prohibited by it to the States,

are reserved to the States respectively, or to the people.
2.2 A Legislative Branch: The Isthmian Canal Commission (19041914)
The seven-member Isthmian Canal Commission was established as the
sole legislative arm of the Canal Zone from 1904 until 1914. As authorized by the President of the United States, the Commission could legislate on any matters with at least a quorum of four or more members.
The Commission did not have the same powers of Congress when it
came to major issues of the national endeavor of the Panama Canal.
The Isthmian Canal Commission was described in its annual report in
1904 as holding a relation to the canal construction work similar to
that of a board of directors to a great railway enterprise, except that the
Commissioners are in closer touch with their work and the majority
being civil engineers, stand in the relation of consulting and designing
engineers to the canal work. The parallel between the Isthmian Canal
Commission and the board of directors of a transcontinental railroad
granted by Congress as a public franchise was, of course, not a casual
or accidental comparison.
The first legislative priorities for the Commission were sanitary conditions in the adjacent maritime cities of Coln and Panama, as per
Article Seven of the 1903 Hay-Bunau-Varilla Treaty, as well as the
Commissions powers to raise and appropriate revenues, not inconsistent with the laws and treaties of the United States and submitted
for the approval of the Secretary of War. The Canal Zone government was to be paid for from local revenues so far as possible but
construction expenses incurred before the Panama Canal went into
operation were to be paid directly by Congress per Section Five of
the Spooner Act of 28 June 1902. The Commission was obligated to
submit to Congress in detail all proposed expenditures and revenues
at the beginning of each year, and present on or before the end of each
year in its annual report a detailed account of all the money received
or disbursed in the performance of their duties, as well as a report on
the progress of construction of the canal itself.
After the first year of the Commissions work, Roosevelt sent two
letters in April 1905 noting that the practical result of the operations of
the Commissions work has not been satisfactory, requiring changes
in the personnel of the Commission and its guidance. Roosevelt
ordered that the general duties of the Commission be divided among
three executive departments. First, the chairman of the Commission
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did not have to reside in Panama but would be responsible for all fiscal
affairs including purchase and delivery of all materials and supplies;
accounts, bookkeeping, and audits; and the commercial operations of
the Panama Railroad Company and the steamship lines. The second
department would encompass the responsibilities of the Governor who
would have to reside on the Isthmus and had duties as explained in
Roosevelts 9 May 1904 orders including administration and enforcement of law in Canal Zone; and sanitation in Panama City and Coln.
Finally, the third executive department was the Chief Engineer who
like the Governor had to reside in Panama and was responsible for
all of the actual supplies and work of construction including practical
operation of the railroad.
2.3 A Judicial Branch: The Courts
The first legislative act of the Isthmian Canal Commission in 1904 was
an act to establish a three-judge Supreme Court, three circuit courts,
and five municipal courts. The Canal Zone police force was part of the
executive branch of government under the authority of the Governor
but at least initially they also served as marshals of the courts. The
three judges of the Canal Zone Supreme Court also sat on the three
circuit courts and were to be paid from Canal Zone government funds.
Municipal judges were to be paid from separate municipal tax funds,
the power of taxation being given to the municipalities of the Canal
Zone by yet another legislative act of the Commission.
One problem for the Commission in setting up the Canal Zones
judicial branch was whether a Canal Zone Supreme Court was necessary at all. The Commission recognized the need for a right to appeal
the rulings of Canal Zone courts and suggested they be heard in federal
court in the United States. However, the Commissions opinion that
all appeals be heard in federal courts in the United States required the
approval of Congress. The Commission stated that they would have no
choice in the interim but to organize a Canal Zone Supreme Court.
The Commission asked Congress to settle the matter and preferred
that there not be a need for a Canal Zone Supreme Court, regardless of
the inconvenience to litigants who would have to travel to the United
States for their appeals.
2.4 An Executive Branch: The Governor
The eighth act of the Isthmian Canal Commission provided for the
organization of the executive branch of government. The preliminary
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plan for the executive branch was a Governor with paid staff filling
four executive offices including the office of the Governor, executive
secretary, treasurer, and auditor; as well as five executive departments
including health, revenues, justice, police, and education.
As the chief executive officer acting in the name of the President
and the Secretary of War, the Governor was responsible for seeing that
all laws, rules, plans, and procedures set down by the Isthmian Canal
Commission were faithfully executed. The Governor ran the executive branch of the Canal Zone government including most of the paid
professional staff and manual laborers, and generally executed any acts
established by the Commission. The Governor was responsible for
preserving public health, public order, and the property of the United
States per Article Seven of the 1903 Hay-Bunau-Varilla Treaty, and was
empowered to notify the Secretary of War of any emergency requiring
the military forces of the United States. Governors were appointed by
the President and answered directly to the Secretary of War.
2.5 Direct, Indirect, Induced, and Parallel Business Operations to the
Construction and Operation of the Panama Canal
The sale of all rights and properties belonging to the French Canal
Company for $40 million was authorized by its stockholders 23 April
1904. The United States took possession on 4 May 1904, with instructions to continue operations with the same work force used by the
French Panama Canal Company. Separate from the operations of the
French Canal Company, and at the time of Roosevelts 9 May 1904
letter to Taft, the United States federal government had managed to
purchase a 69/70th share of stock in the Panama Railroad, and was
preparing to locate and purchase the last remaining stock.
The Panama Railroad Company was maintained as a distinct organization and was not included as an executive department of the
Canal Zone government. Roosevelt asked that the members of the
Isthmian Canal Commission be elected to its board of directors and
the Panama Railroad Company managed as a separate and distinct
business enterprise. The policy of the railroad was to be completely
harmonized with the policy of the Government of making it an
adjunct to the construction of the canal, at the same time fulfilling
the purpose for which it was constructed as a route of commercial
movement across the Isthmus of Panama. Thus the model of harmonizing the role of business enterprises was like that of a public
franchise, i.e., the transcontinental railroads, constructed for public
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welfare and the common defense but not inconsistent with a function
to generate revenue.
3. The Operations and Government of the Panama Canal (19141951)
3.1 An Operating Organization of Organizations
The Isthmian Canal Commission was abolished effective April 1, 1914.
After the disbanding of the Isthmian Canal Commission and reorganization as The Panama Canal, the Governor of the Panama Canal
became the President of the Panama Railroad Company. American
canal administrators reflecting on the organization of the Panama
Canal in 1923 said that the Panama Canal was not a single organization devoted to matters of canal construction, operations, and maintenance; rather it was an organization of organizations with different
functions and operations. The organization of organizations included
1) an organization for canal construction, operations, and maintenance; 2) an organization of business enterprises to supply products
and services for everything from transiting vessels to the workforce;
and finally, 3) an organization of civil government to provide basic
services like roads, schools, sanitation, sewer, water, hospitals, housing, police, a court system, and just about everything else an organized
government does to support its citizens.
In describing the responsibilities of the Governor of the Panama
Canal Zone, who was also president of the Panama Railroad Company,
the Annual Reports of the Governor of the Panama Canal (19141952)
break labor into three categories. One general category of work was
canal operations, which included all the work of transiting vessels and
administering the canal itself. Another general category was business
enterprises, described as the work of providing fuel, provisions, chandlery, and repairs to vessels; food and clothing to the working force;
handling of cargo, and like business operations; and the operation of
the steamship line and the Panama Railroad; in fact, all work that in the
United States is commonly carried on by private enterprise. Finally, the
last general category of canal work was civil government and the functions that correspond to federal, state, and local governments including
diplomatic relations, posts, customs, police, education, health, water,
and other public services. Many of the divisions and departments were
maintained with slightly different names even during periods of major
reorganization, for example, the dredging division, locks division, and
marine (later navigation) divisions are mentioned as early as 1921.
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Employment in the various divisions and departments of the Panama Canal was much diversified in terms of the different functions
needed and their job descriptions, from engineering to accounting
and from general grounds keeping to piloting vessels. A number of
secondary authors have discussed the existence of a dual wage system
based upon paying employees in currency on a gold or silver standard. Earlier Panama Canal Annual Reports suggest this was common
practice. However, the distinction between gold and silver employees
also extended to quarters, commissaries, clubhouses, and other public
facilities. Though the distinction was effectively one between United
States citizens and citizens of other nations, including Panama, the
actual distinction was between people employed in executive, supervisory, professional, or other technical positions that as part of the job
description required educational credentials or special training. Thus
there were at least two potential distinctions among the Panama Canal
labor force including nationality, and rate of pay based on position.
Between the original phase and World War II, nationality and rate
of pay based on position were synonymous. However, the 1948 and
1949 Annual Reports of the Panama Canal signal the first change in
terminology from silver versus gold rates of pay to the terms local
versus United States rates of pay (see Figure 18). The 1948 Annual
Report says that for many years only United States citizens were eligible for executive and technical positions, but it suggests that for
several years past properly qualified citizens of Panama have been
eligible for appointment to executive, supervisory, or professional
positions if they meet the educational and training requirements of
the job. Panamanians employed in higher category executive or professional positions were paid at equivalent or closely similar rates of
pay as those prevailing in the United States. However, until 1979 the
Panama Canal annual reports only list employment statistics by rate
of pay and division without also listing nationality. In other words,
though one might assume many higher category professional positions
were held by United States citizens, technically speaking employees
paid at United States rates were not synonymous with citizens of
the United States. It is unfortunate because it is impossible using the
annual reports as a source to accurately gauge the trend in how many
Panamanian nationals began to be paid at United States rates, being
qualified for higher category positions, and in which divisions or
department that trend occurred first.
18. Employees of the Panama Canal by rate of pay 19061996
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201
C. The Two Panamas During an Era of Political Opposition

Among the Elite 1900s to 1930s
There were four political bases of support in Panamanian politics after
independence in 1903. One consisted of elite immigrants moving to
Panama to take advantage of business opportunities associated with
the Panama Railroad Company and the construction of the Panama
Canal, who married into and associated themselves with older Panamanian families. Another political base of support consisted of urban
working class from the Caribbean of African or mixed African and
Hispanic origin who lived outside of the walls of the colonial city (the
arrabal). The third based of political support included Hispanic cattle
ranchers and other rural landholders who though proud of their colonial Hispanic heritage did not have wealth. Other political contingents
included American and European immigrants who tended to associate
with the maritime elite families, and finally, immigrant Mediterranean
or Caribbean workers of African descent who were either naturalized
or were not Panamanian citizens but lived and worked within the
jurisdiction of the Canal Zone itself.
After the construction of the Panama Railroad was complete, Liberals developed political ties with remaining Caribbean urban workers
of African origin, whose numbers posed a political threat to urban
maritime-commercial elite after they were given the right to vote.
Belisario Porras (from Las Tablas in the interior) was the first Panamanian politician after independence to develop ties with urban skilled
and unskilled workers of mixed Caribbean black origin by working
through key social intermediaries like local intellectuals, labor leaders,
and sports figures who then advocated support for Porras presidency
in return for government positions. Porras was able to combine the
urban worker base with other non-elite commercial business owners in
the maritime cities as well as landowners in the interior, and as an elite
Liberal was able to win the first election against the Conservatives.
1. States Rights Disputes Against the United States from the 1900s
to the mid-1910s
1.1 Liberal Party Maritime-Commercial Elite Political Opposition to
the Rule of the Conservative Party Maritime-Commercial Elite
Most of the representatives of the Republic of Panamas Provisional
Government were members of the Conservative Party. Many of the
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Republic of Panamas Conservative Party leaders, like Dr. Manuel Amador, had worked for the Panama Railroad Company and though part
of the revolutionary party represented a minority. Prior to its independence, the Liberal Party dominated Panama and the War of One
Thousand Days was nearly lost to a Liberal army under the command
of Benjamn Herrera.
Conservative leaders controlled the Presidency and the National
Assembly for a decade after Panamanian independence despite challenges from the Liberal Party, with whom there was at least initially
a coalition government. Just after independence, Panamanian Secretary of Foreign Affairs Francisco V. de la Espriella had petitioned the
United States through envoy Bunau-Varilla to seek a guarantee of constitutional order.5 Article 136 of the 15 February 1904 Constitution of
the Republic of Panama states:
The Government of the United States may intervene in any part of the
Republic of Panama to reestablish public peace and constitutional order
in the event of their being disturbed, provided that that Nation shall, by
public treaty, assume or have assumed the obligation of guaranteeing the
independence and sovereignty of this Republic.6
Members of the Conservative Party supported Article 136 while members of the Liberal party were against it.7 In 1906, when the Liberal Party
obtained only 3 of 28 seats in the National Assembly and its members
and faithful took to the streets, Canal Zone authorities demanded that
the Liberal Party supporters disperse or face American troops. Political
division and blame over the approval of the Hay-Bunau-Varilla Treaty
began to surface in the Republic of Panama as early as the summer of
1904. Ideally, the political party that could claim they delivered the
canal treaty to the citizens of Panama would be in a very strong position. Probably, it was Liberal elite opposition leaders that first tried to
transform perception of the Hay-Bunau-Varilla Treaty of 1903 as a
fraud foisted upon Panama by self-interested Conservative elite.
Major (1984).
Edwin C. Hoyt, National policy and international law: Case studies from American
canal policy (Denver: University of Denver, 196667). Hoyt (19667, 39) says that
Article 136 of the 1903 treaty was put in at the proposal of Secretary of State Elihu
Root, who had proposed a similar article for a treaty with Cuba.
7
Michael L. Conniff, Panama and the United States: The forced alliance (Athens:
University of Georgia Press, 1992), 72.
6
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2. The 1904 Letter from Secretary of State John Hays Letter to

Panamanian Ambassador Jose De Obalda
2.1 The Federal Governments Constitutional Jurisdiction in
Panamanian Territory
The transcontinental railroads and the Panama Canal were established
as public franchises under the same constitutional powers given to
Congress and to the President. The transcontinental railroads and the
Panama Canal were both the result of a process whereby public land
was granted through the territory of an original sovereign State or
Territory within a five-mile buffer of land on either side of a proposed
line of transit, representing the primary limits or minimum area of
public lands granted. It is interesting to think about what portion of
the formal disagreements between the United States and the Republic
of Panama was just a kind of States rights dispute, and what portion was due to political or cultural peculiarities unique to either the
United States or Panama.
The summer of 1904 marked the first federal States rights dispute
between the United States and the new Republic of Panama over the
United States federal governments exercise of sovereignty over a public franchise in the Canal Zone. The diplomatic exchange that occurred
helps clarify the nature of the States rights dispute. The 1904 disagreement focused on which sovereign rights the Republic of Panama had
expressly transferred to the United States federal government through
the various articles of the Hay-Bunau-Varilla Treaty, and which it
had reserved for itself. Both sides seemed to see their relationship in
terms of a federalist division and transfer of sovereignty in the Canal
Zone, although there were attempts by Panamanian representatives to
reframe the understanding of the 1903 Hay-Bunau-Varilla Treaty as a
contract for a lease.
Panamanian representatives claimed that the United States should
not exercise jurisdiction in the Canal Zone to the detriment of the
Republic of Panamas ability to support itself fiscally and commercially,
in other words, Panamas right to tax a public franchise. Panamanians
made specific in their disputes with the United States exactly what
action or what privilege the United States was illegally exercising in the
Canal Zone. Panamanians tried to explain how American jurisdiction
was detrimental to their ability to raise revenues or take advantage of
what they considered their geographic natural resource. Panamanian
representatives also claimed that American authority could not apply
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in the Canal Zone if it was not strictly for the protection, construction,
operation and maintenance of the Panama Canal.
The diplomatic exchange began after the formal establishment
of the Canal Zone. On 9 May 1904, President Theodore Roosevelt,
through Secretary of War William H. Taft and in accordance with
the Spooner Act of 28 June 1902, and the Hay-Bunau-Varilla Treaty,
issued detailed instructions for a Canal Zone government. On 24
June 1904, Secretary of War Taft by direction of the President issued
instructions for the Chairman of the Isthmian Canal Commission to
establish ports, tariffs, custom houses, and post offices in the Canal
Zone. On 15 July 1904, a local Panamanian chamber of commerce
issued a letter to the President of Panama, Manuel Amador Guerrero.
The letter complained that the grant of sovereignty in the Canal Zone
to the United States as stipulated in the Hay-Bunau-Varilla Treaty did
not mean the United States could establish ports, custom houses and
tariffs. The letter said in colorful terms that unless Panamanians were
allowed a monopoly on finished merchandise and produce sold in the
Canal Zone, Commerce, agriculture, and the cattle business would
be strangled . . . the Government of Panama, which should derive its
revenues from these sources, would suffer the same fate. . . . Disaster
would be general and all would be forced to emigrate.8 It may be
noted that the local chamber of commerce made this initial protest,
not officials of the Republic of Panama. On 26 July 1904, Panamanian
officials attempted to enforce tonnage duties on the Chilean steamer
Limari. The Limari was unloading at the port of La Boca at the proposed entrance to the Panama Canal on the Pacific Ocean, a port that
the Governor of the Canal Zone declared was within Canal Zone territory and therefore under United States jurisdiction and free from any
Panamanian tonnage or port duties.
Official Panamanian protests about the exercise of sovereignty in
the Canal Zone by the United States were lodged in two letters, which
were replied to by a letter from the Secretary of State to the Panamanian ambassador. One letter was by Panamanian Secretary of Government and Foreign Affairs Tmas Arias to Envoy John Barrett on 27
July 1904. Another letter was from Panamanian Ambassador to the
United States Jose de Obalda to Secretary of State John Hay on 11
August 1904. The American reply to the Panamanian correspondence
205
is Secretary of State John Hays lengthy letter of 24 October 1904

to Ambassador De Obalda, the letter that framed the conventional
American interpretation of rights acquired in Canal Zone territory via
the Hay-Bunau-Varilla Treaty of 1903.
In the letter dated 27 July 1904, Arias said that the United States
could not expect to exercise sovereign rights, power, and authority
to the detriment of the Republic of Panamas fiscal and economical sovereignty. Arias claimed that the Republic of Panama reserved
what it did not expressly transfer. To support this claim, Arias says
that nowhere in the treaty was the Republic of Panama specifically
excluded from the right to charge postage, maritime taxes, and other
aspects of its economic and fiscal sovereignty in Canal Zone territory. Arias reiterated, The fact stands, therefore, that Panama, being
the original owner of the canal zone, clearly reserved what it did not
expressly surrender.
In his 24 October 1904 reply, Hay pointed out that the States rights
argument is correct in principle if, in fact, the Republic of Panama had
not expressly surrendered the exercise of sovereign rights, power and
authority in the Canal Zone. In Article III, the Republic of Panama not
only granted all powers, rights and authority to the United States but
also prevented itself from exercising any such powers, right or authority. Recall Arias point that Panama reserved what it did not expressly
surrender. Among the Federalist Papers, No. 23 stated that via the
terms of the United States Constitution, the State governments would
clearly retain all the rights of sovereignty which they before had, and
which were not, by that act, exclusively delegated to the United States.
However, Federalist Paper No. 23 lists three exceptions whereby a
State confers sovereignty upon the federal government and is unable
to exercise that right itself, such that exclusive delegation, or rather
this alienation, of State sovereignty, would only exist in three cases: [1]
where the Constitution in express terms granted an exclusive authority to the Union; [2] where it granted in one instance an authority to
the Union, and in another prohibited the States from exercising the
like authority; and [3] where it granted an authority to the Union, to
which a similar authority in the states would be absolutely and totally
contradictory and repugnant.9 Article III of the Hay-Bunau-Varilla
9
Mortimer J. Adler, Great Books of the Western World, Vol. 43, The Federalist
(Chicago: Encyclopdia Britannica Inc., 1952), 105106.
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Treaty seemed to fit Federalist Paper No. 23s second exception by,
firstly, granting full exercise of sovereign rights, power and authority
to the United States, and secondly, entirely excluding the Republic of
Panama from the exercise of any such sovereign rights, power, and
authority.
In Secretary of State Hays reply to De Obalda, dated 24 October
1904, Hay uses the controversy over whether the United States had
exceeded its authority for a general defense of United States exercise of
sovereignty in Canal Zone territory. The Hay letter claims at least five
principal grounds for United States exercise of sovereignty.
First, Hay does not accept De Obaldas conflating the Hay-Herrn Treaty and the Hay-Bunau-Varilla Treaty. Hay says, Whatever
could or would have been the effect of the stipulations of the proposed
treaty with Colombia, known as the Hay-Herran Treaty, is rendered
unimportant by the fact that said treaty was not concluded but was
rejected by Colombia. In reference to sovereignty pledges given to
the Republic of Colombia in Article IV of the Hay-Herrn Treaty, Hay
says that it has been the long-established policy of the United States
to defend the sovereignty of the independent nations of the Western
Hemisphere. However, Hay said that it does not include the denial
of the right of transfer of territory and sovereignty from one republic
to another of the western hemisphere upon terms amicably arranged
and mutually satisfactory, when such transfer promotes the peace of
nations and the welfare of the world.
Second, Hay rebutted the argument that the phrase for the construction, maintenance, and operation . . . in Article III constitutes a
limitation on the grant of sovereign rights, power and authority to the
United States. Hay says that the phrase is merely a declaration of the
inducement prompting the Republic of Panama to make the grant.
Third, Hay tests the treaty to prove the point that the United States
acquired the right to exercise sovereign privileges, including establishing custom houses and post offices, etc., in Canal Zone territory. If
the United States were the sovereign of the territory, Hay asks rhetorically, would it be able to establish custom houses, regulate commerce,
establish post-offices, etc.? Yes, Hay says, it would. Hay then applies
a similar rhetorical query to the Republic of Panama and says, If it
were conceded that the abstract, nominal, rights, powers and authority of sovereignty in and over the zone are vested in the Republic of
Panama, there would still remain the fact that by said Article III the
United States is authorized to exercise the rights, power and authority
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of sovereignty to the entire exclusion of the exercise by the Republic

of Panama of any such sovereign rights, power or authority. He follows with the formulation that though the Republic of Panama did
not confer absolute sovereignty to the United States, it retained only
a titular sovereignty amounting to, in a famous turn of phrase, little
more than a barren scepter.10
Fourth, Hay says that the wording seems to make a distinction
between the Canal Zone territory and the rest of the Republic of
Panama. The implication is that Panamanian representatives distinguished between Panamas rights in the Canal Zone and in the rest of
the Republic of Panama. Hay feels that such would not be necessary
if the Panamanian claim were true that their exercise of sovereignty
covered the entire Isthmus. Hay includes parts of Panamas Constitution stating that the territory of the Republic remains subject to the
jurisdictional limitations stipulated or which may be stipulated in public treaties concluded with the United States of North America for the
construction, maintenance, or sanitation of any means of interoceanic
transit.11 In addition, Hay mentions articles of Panamas Constitution directing the executive to establish duties where a clear difference is made between those by the Republic of Panama and those by
the United States in Canal Zone territory. Finally, Hay notes several
Panamanian court cases clearly implying that criminal jurisdiction
was transferred to the United States because the Panamanian courts
felt that they lacked jurisdiction. Hay calls attention to every instance
he can muster where the Republic of Panama either does not assert
full sovereignty, or recognizes some kind of United States jurisdiction.
Therefore, having proven that Panama does not exercise full sovereignty in the Canal Zone, as De Obalda was supposed to have been
arguing, Hay concludes that the Republic of Panama must only have
some kind of partial sovereignty which Hay saw to be no more than
a barren scepter. In one instance, De Obalda said that he was concerned only about Panamas fiscal and economic sovereignty. Hay
then said, in a very curious turn, that the United States never claimed
to be sovereign. Rather Hay claimed the United States merely claimed
the right to exercise all sovereign rights, power and authority to the
entire exclusion of any such exercise by the Republic of Panama.
10
11

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Fifth and lastly, Hay explains that the devotion of federal funds for
projects like an interoceanic canal are spent predicated on the fact
that the territory is subject to United States sovereignty. The HayBunau-Varilla Treaty does not explain why the United States has to
exercise sovereignty in the Canal Zone so that federal funds can be
used. Hay says:
For many years after the adoption of our Constitution the belief prevailed that the funds of the National Government could not be expended
in the construction of public improvements, excepting those required
for the use of the National Government, such as the Capitol, executive
department buildings, arsenals, forts, custom-houses, post-offices, etc.
The construction of highways, railroads, etc., the improvement of rivers and harbors, etc., the protection and improvement of water powers,
construction of canals, and similar undertakings for the use and convenience of the general public and private enterprises, was considered to
be outside the competency of the National Government, although said
works were to be constructed in territory subject to the national sovereignty. Finally, it was established that the National Government had the
authority to enter upon the construction of public works of the character
referred to, and to devote the public funds of the nation thereto; and the
reasons inducing such determination are all predicated on the fact that
such public works are to be situated in territory subject to the national
sovereignty. It is quite probable that this phase of the situation is not
considered by the Panamanian authorities, and that they do not distinguish the difference between the Government of the United States and
the French Canal Company. The French Company was a private enterprise and derived its funds from individuals who voluntarily devoted
their private means to promoting the endeavor; such funds could be
expended anywhere and for any purpose sanctioned by the contributors. But the Government of the United States in building the canal does
not expend private funds, but public moneys derived by public taxation for public purposes. Moneys so realized may be used for national
purposes outside the territory subject to the national sovereignty, such,
for instance, as the promotion of a war in foreign territory, for in time
of war the war powers of the nations are called into activity, and those
powers are coextensive with the nations necessities, and the conduct of
the war is especially enjoined upon the National Government by our
Constitution; so also these funds may be expended for the purchase of
ground for the erection of embassies, coaling stations, etc., for those are
instrumentalities of the National Government; but the Isthmian Canal
is an instrumentality of commerce, a measure for the promotion of the
purposes of peace. Commerce is the life of the nation, but it is conducted
by individual citizens in a private capacity and not as a governmental
institution.
209
Hay said that the Constitution stipulates federal funds can only be
expended in territory under United States sovereignty. For Congress
to fund the construction of the Panama Canal there had to be a Canal
Zone buffer around the line of the canal where the federal government
had jurisdiction. The Spooner Act, 1903 Hay-Bunau-Varilla Treaty,
1903 Hay-Herran Treaty, and any interoceanic canal treaty would be
unconstitutional if they called for anything less than perpetual control
of Canal Zone territory as if it were a territory or possession of the
United States.
3. The 1907 Supreme Court Decision in Wilson v. Shaw,
Secretary of the Treasury
3.1 The Federal Governments Jurisdiction in the Canal Zone is
Constitutional
The United States Supreme Court in the case of Wilson v. Shaw, Secretary of the Treasury on 7 January 1907 supposed that if the federal government had had the power to construct interstate highways
within the States, as it did through the public land grant system for
roads, canals, and the transcontinental railroads then it should certainly have the power to do so within the Territories and outside of
state lines, where it would not conflict with the reserved power of the
States. In the case of Wilson v. Shaw, the plaintiff was a private citizen
who sought to stop payment of the $40 million ($930 million adjusted
from 1904 to 2007 dollars) to the French company and $10 million
($230 million adjusted from 1904 to 2007 dollars) to the Republic
of Panama, as well as any money to build the Panama Canal on the
grounds that it was an unlawful disbursement of public funds or issue
of public obligations . . . . [for] an unauthorized business venture.12
The plaintiff in the case based his argument on the very thing that
Secretary of State Hay had argued in the States rights dispute with
representatives of Panama in 1904. The Constitution authorized federal funds be used only within a United States territory or possession,
which the Canal Zone was not. The plaintiff said that the Canal Zone
was not acquired as a territory or possession in the 1903 Hay-BunauVarilla Treaty. The Supreme Court affirmed the judgment of a Court
12
U.S. Congress (1977b, 16341635).
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of Appeals ruling that the plaintiff was not entitled to bring such a
suit unless he showed direct and special injury, i.e., the mere fact he
is a taxpayer is not enough.13 In the opinion of the Court, the petition
to stop the construction of the canal was a startling request. Although
the decision was against the plaintiff on the basis of no grounds for
complaint, the Supreme Court examined each one of the plaintiffs
arguments against the constitutionality of the Panama Canal project.
Firstly, the plaintiff argued that the Spooner Act required a treaty
with the Republic of Colombia, not the Republic of Panama, and that
it is not a compliance with the terms used, that these rights and privileges shall have been obtained by force from the Republic of Colombia, or by treaty or otherwise from anyone else; nor does this act in
terms authorize under any conditions the payment of any money to
the Republic of Panama.14 Therefore, the plaintiff contended, whatever title the Government has was not acquired as provided in the act
of 28 June 1902, by treaty with the Republic of Colombia.15 The Court
replied that the territory of Panama had passed by an act of secession
to the Republic of Panama and that a treaty ceding the Canal Zone
[to the United States], was duly ratified.
Secondly, the plaintiff claimed that Congress under the Constitution has no authority to employ public funds in making, buying or
operating commercial enterprises including railroads or canals in foreign countries. What was required by the Constitution, a cession of
territory, had not been acquired since the boundaries of the Canal
Zone were not defined in the treaty and because the Canal Zone was
not declared a territory or possession of the United States. The Court
answered:
It is hypercritical to contend that the title of the United States is imperfect, and that the territory described does not belong to this Nation,
because of the omission of some of the technical terms used in ordinary
conveyances of real estate . . . disputes not infrequently attend conveyances of real estate or cessions of territory. Alaska was ceded to us forty
years ago, but the boundary between it and the English possessions east
was not settled until within the last two or three years. . . . The title of
the United States to the Canal Zone in Panama is not imperfect either
because the treaty with Panama does not contain technical terms used
13
14
15
U.S. Congress (1977b, 1640).

U.S. Congress (1977b, 1636).
U.S. Congress (1977b, 1641).
211
in ordinary conveyances of real estate or because the boundaries are not

sufficient for identification, the ceded territory having been practically
identified by the concurrent action of the two interested nations.
Lastly, the plaintiff contended that the power given to Congress in

Article I, Section Eight of the Constitution was the power to regulate,
not to carry on, commerce. Navigation and transportation is carrying
on commerce. Therefore, an interoceanic canal project in any territory foreign or domestic falls outside the provenance of the United
States federal government. To answer this third objection, the Court
cited several cases demonstrating that the federal government had the
power to construct interstate highways, based on the territorial expansion of the United States and the need to construct transcontinental
railroads. In other words, the need for transportation through unconsolidated western territories of the United States had required special
powers of the federal government to have direct authority over public
lands necessary for the construction and operation of railroads.
Citing the 1888 California v. Pacific Railroad Company decision, the
Court said that the powers of the federal government to regulate commerce came from Article I, Section Eight of the Constitution. The federal government did not exercise its powers to any extent until required
by the commercial expansion of the country and the growth of land
transportation, particularly railroads, into public lands not organized
into States. Without the authority of the federal government, no one
authority would have been able to regulate the consistent use, operation and maintenance of the vast road system in its entirety.
In California v. Pacific Railroad Company, 127 U.S. 1, 39, it was said . . .
These authorities recognize the power of Congress to construct interstate highways. A fortiori, Congress would have like power within the
Territories and outside of state lines, for there the legislative power of
Congress is limited only by the provisions of the Constitution, and cannot conflict with the reserved power of the States.16
The Supreme Court therefore supposed that if the federal government

had the power to construct interstate highways within the States, it
should certainly have the power to do so within the Territories and
outside of state lines where it cannot conflict with the reserved power
of the States.
16
U.S. Congress (1977b, 16424).
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6.2 The 1904 Taft Agreement

Due to the dispute that arose over the existence of Canal Zone ports,
tariffs, custom houses, and post offices outside the jurisdiction of the
Republic of Panama as well as the rights of Panamanian businesses to
Canal Zone markets, in his 18 October 1904 letter President Roosevelt
requested Secretary of War Taft to travel to Panama.
Secretary of War William H. Taft arranged the non-exercise of
United States control after a conference with Panamanian representatives in Panama City on 28 November 1904. The meeting in Panama
City was arranged to settle differences between the two countries as a
result of the Hay-Bunau-Varilla Treaty. Taft was to advise Conservative President Manuel Amador (19041908) what the policy of the
United States was and that the purpose was not to create a competing
and independent community which shall injuriously affect their business, reduce their revenues, and diminish their prestige as a nation,
and particularly to dissuade speculation about American intentions in
the future. Roosevelt went on to say that Taft was to communicate to
Panama that the United States had not the slightest intention of establishing an independent colony in the middle of the State of Panama . . .
Least of all do we desire to interfere with the business and prosperity
of the people of Panama. As a result of Tafts ten days of meetings in
Panama with the Conservative-led government, Taft issued Executive
orders in Roosevelts name dated 3 December 1904 and 6 December
1904 discussing a number of limitations on the exercise of the federal
governments jurisdiction in the Canal Zone.
The Taft Agreement was not a treaty but a series of executive
orders.17 The first of these executive orders entered into force on 12
December 1904. Taft summarized the basic conclusions of Secretary of
State Hays letter to Ambassador De Obalda of 24 October 1904, suggesting that the Hay-Bunau-Varilla Treaty did not confer total sovereignty on the United States but rather left to the Republic of Panama at
least a titular sovereignty.18 Taft argued a peculiar formulation, agreeing what he called a nonexercise of United States sovereign rights as
a solution to stem the controversy.19
17
18
19

213
Secretary of War Tafts statement before the Senate Committee on

Interoceanic Canals on 18 April 1906 explained how the terms of the
Hay-Bunau-Varilla Treaty were being drawn into domestic politics.
Taft said:
Doctor Amador was President of the Republic. He was the head of the
Conservative party. Pablo Arosemena was vice-president and the head of
the Liberal party. In the era of good feeling between all parties succeeding the revolution they were elected on the same ticket. The parties soon
divided again when the patronage came to be distributed. The moment
the people understood the effect of the introduction of the Dingley tariff
between the Zone and the Republic, they resented the act as an indication of a desire on the part of the United States to grab the land of
the Zone for its commercial purposes, and to exclude all Panamanian[s]
from the profitable business which they had expected to do with the
people of the Zone, gathered there by the United States for the great
work. The opposition party the Liberal party was quick to seize upon
this as a ground for attacking the [C]onservative administration on the
theory that the Government had yielded to the United States and had
sacrificed the interests of the Republic. The attitude of the Liberal party,
of course, reacted upon the course of the [C]onservative administration,
and both parties were at once driven into hostility to any proposition of
the United States looking to the operation of its governmental control
over the Zone at those many points where it came in close contact with
the jurisdiction of the Republic [emphasis added].20
Taft noted that the Liberal opposition was quick to publicly attack the
Conservative administration as taking a conciliatory attitude towards
the United States, in order to create popular resentment. Members of
the Liberal Party attempted to mar Secretary of War Tafts 1904 visit
to Panama with some sort of demonstration, for they feared that an
amicable adjustment of the Panamanian grievances would strengthen
the administration for the approaching municipal elections.21 Taft
said that popular misconceptions about the United States federal government using its jurisdiction over the Panama Canal and Canal Zone
for commercial purposes, combined with a rivalry between the elite
of the Liberal and Conservative Parties as having sacrificed the interests of the Republic, had driven both parties into hostility to any
20

William D. McCain, The United States and the Republic of Panama (New York:
Russell & Russell, 1965/1937), 42.
21
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proposition of the United States looking to the operation of its governmental control over the Zone.
4. The Two Panamas and the Beginning of Civil Rights Protests
from the mid-1910s to the 1920s
4.1 Non-Elite Territorial-Administrative Social Rivals to the
Maritime-Commercial Elite
After independence, Belisario Porras and other Liberal Party elite
opposition turned to non-elite military leaders like General Esteban
Huertas to try to win the electoral majority against the incumbent
Conservatives. Neither a native Panamanian nor a member of the
elite, Huertas showed potential to attract a mass following among the
non-elite of both the port cities and the interior. Conservative wariness about Huertas political agenda combined with United States
recommendations that the Republic of Panama limit itself to a police
force led to the disbanding of the Panamanian Army on 18 November
1904. The National Police was founded in December 1904 as a force of
roughly 1,000 for the entire country, and at least in the year 1918, its
superintendent was a United States citizen.
The maritime-commercial elite of the Conservative Party continued
to control politics until the first victory of Liberal President Belisario
Porras. Porras won the 1912 election and two others as well by appealing to the three different political groups. One political group was
Caribbean immigrants and people of mixed African origin living in
the arrabal. A second group was lower and middle echelon merchants
in the port cities. The third group was interior landowners, ranchers,
and rural smallholders of Hispanic descent who were relatively poor
but proud of Hispanic traditions they sometimes traced to colonial
period. One historian of Panama describes the landowners and ranchers of the territorial-administrative society of the interior in the following way:
They had little use for the urban commercial elite; whom they considered to be newly rich interlopers with few roots in Panama; nor
did they think highly of urban society as a whole, whose masses were
increasingly of African origin. . . . To capitalize on this base, a Creole
leader from the interior was nominated for the presidency, one who
could challenge the governing credentials of the urban commercial
elite portrayed as consisting of pretentious mestizos and mullatos. . . .
Many of these new urban dwellers [cattlemen and subsistence farmers who moved to terminal cities] settled together in pockets around
215
Panama City and Colon, where they managed to preserve their rural
identity and allegiances.22
During the 1912 elections that ultimately resulted in the first victory for Porras and the Liberal Party, American Army officers and
two hundred troops were asked to supervise registration and polls by
temporarily acting Panamanian President Pablo Arosemena. Several
authors note that it was a tendency for politicians during the first few
decades after Panamanian independence to call on the United States
to guarantee elections when out of power and to oppose such measures when in control of the electoral apparatus.23
The mid-1910s to the 1920s marked the beginning of a non-elite
territorial-administrative rivalry with the maritime-commercial elite.
After the end of the initial construction phase of the Panama Canal
in 1914, in order to soften the loss of demand from the collapsing
labor market in Canal Zone, a rule was put in place that half of all
Canal Zone employees must be Panamanian native workers, paid in
silver-based currency.24 In 1917, a law was implemented to strengthen
the Spanish language and, by 1918, Panama City contained a growing
class of professionals and bureaucrats many of whom migrated from
the interior and were tied economically to the Panamanian government rather than the Canal Zone, a group that became increasingly
frustrated by a lack of access to administrative positions in the Panama
Canal and Canal Zone.
United States federal government advisors participated directly in
the day-to-day running of the Republic of Panama in the first few
decades of its existence. The trend accelerated after 1918 when United
States financial advisors were given broad authority to reform aspects
of the countrys fiscal operation. It was at this high water mark of
United States involvement in Panamanian national affairs that middleechelon rural interior political rivals to the maritime-commercial elite
began to emerge. Political rivalries coincided with the migration of
middle-echelon rural job seekers to Panama City. Though a rural
middle-echelon may have come to Panama City they were still tied
to the culture of the western interior and were employed in the Panamanian bureaucracy rather than by Canal Zone-related businesses.
22
23
24
Ropp (1982, 19).

Alba Carranza (1976, 262).
Ropp (1982).
216
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Middle-class urban professionals resented United States involvement

and the urban elite leadership. By the early 1920s, a broad coalition
in the port cities and the interior emerged as opposed not only to the
jurisdiction of the United States federal government in Panama, i.e., a
States rights dispute, but also to the civic and societal goals of the
maritime-commercial elite, i.e., a civil rights movement.25
D. Conclusion
Territoriality over the environment of Panama and flows through
it during the period of the 2nd republic (1870s1930s) after Panamanian independence was an interaction between a predominantly
American preventive posture, and a maritime-commercial elite in
Panama engaged in a States rights dispute with the United States federal government over the Canal Zone.
The social rivalry between and among the two Panamas, compounded by wealth and status differences, meant that politics in Panama was not the exclusive domain of the elite. The period of the 2nd
republic paired American preventive postures over its territorial and
extraterritorial network of nodes and links in the maritime environment, with the societal goals of a maritime-commercial elite. A consensus of authors suggest that the preventive policies of 2nd republic and
the 1903 Hay-Bunau-Varilla Treaty directly or indirectly supported
what they considered an historically fragile and economically detached
regime of urban commercial elite in Panama.26 These authors suggest
that like other societies dominated by a services-oriented commercial class the maritime-commercial elite did not command genuine
political power because they did not control the countrys agricultural
and industrial production in the interior.27 The maritime elite allegedly
25
Ropp (1982, 21).

For instance, Ropp (1971, 1982), Phillips Collazos (1991), LaFeber (1989). See
also Andrew Zimbalist and John Weeks, Panama at the crossroads: Economic development and political change in the Twentieth Century (Berkeley: University of California
Press, 1991).
27
Zimbalist and Weeks (1991) are more strident than other authors. Zimbalist and
Weeks (1991, 137) say that political instability in Panama resulted from both the
absence of a ruling class in the usual sense at the time of independence and the overwhelming hegemony of the U.S. presence that made a mockery of the term domestic
Panamanian politics.
26
217
made up for their political weaknesses over their rivals and opposition
by relying on the intervention of the United States.
United States intervention to prevent civil unrest in the port cities, especially during elections, sustained the maritime-commercial
elite in the two decades after Panamanian independence. However,
it was the lack of United States intervention in the third decade after
Panamanian independence that had even more lasting effects on Panamanian politics. By the 1930s, American politics was once again in a
period of alteration from republic to democracy. The policy of the
2nd democracy (1930s1970s) was to avoid political intervention in
Latin American governments and, in Panama, to reduce the territorial
jurisdiction of the United States federal government over the day-today administration of the Panama Canal and governance of the Canal
Zone. As a result of a relative vacuum in political order and stability
with the new policy of the United States after the 1930s, two main
groups of non-elite rivals and opposition emerged to challenge the
maritime-commercial elite for control over the Republic of Panama.
One rival was a militarized, and eventually politicized, police force
composed of territorial-administrative non-elite from the interior who
would be called upon to arbitrate elections or restore order during civil
unrest by lower echelons of maritime-commercial society in the port
cities. Another rival and opposition group was student activists mainly
from the territorial-administrative interior of Panama who organized
themselves into federations and would challenge United States jurisdiction in the Canal Zone and the monopoly of the maritime-commercial elite over wealth and status in the port cities.
CHAPTER ELEVEN
THE PANAMA CANAL AND THE TWO PANAMAS UNDER

THE 2ND DEMOCRACY (1930S1970S)
Transportation Under the 2nd democracy (1930s1970s)
The 1903 Hay-Bunau-Varilla Treaty was the result of the preventive
posture of the 2nd republic (1870s1930s) to ensure that a canal
enterprise would never fall into the hands of a European government.
During the 2nd democracy (1930s1970s), the era of New Deal Liberalism, the policy of the United States shifted from a preventive to a
predominantly avoidant posture with respect to involvement in the
affairs of Latin American governments. A shift in foreign policy had
begun to occur by the time of the 17 December 1928 Clark Memorandum, written by Republican President Calvin Coolidges Under Secretary of State Joshua Rueben Clark. The Clark Memorandum restated
that the purpose of the Monroe doctrine was to prevent European
governments from threatening United States national security and
self-preservation. The memo rejected Roosevelts 1904 corollary that it
was the policy of the United States to directly and preemptively intervene in the Western Hemisphere, if necessary, to restore civil order or
eliminate debt as a means of preventing Latin American nations from
becoming susceptible to intervention by European governments.
The Great Depression (19291939) focused American policy on
redistributing federal revenues to domestic welfare programs rather
than projects with foreign governments. Likewise, World War II, the
Korean Conflict, and the Vietnam War focused American military
attention on high magnitude events and the capability to project military force against foreign threats far from the near-shore maritime
and aerospace environment of the United States itself.1 It is reasonably
well-established that during the policy regime of the 2nd democracy
there was both covert and overt financial support and military training
See Earle (2003).
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given to Latin American paramilitary police forces by the United States

so as to prepare them to prevent fascist or communist insurgencies by
force. This does not alter the fact that an avoidant face was put on the
overt policy of the United States.
For instance, in his inaugural address in 4 March 1933 Democratic
President Franklin D. Roosevelt announced the Good Neighbor Policy, saying that the United States would no longer hold it as a matter
of policy to directly intervene in the internal affairs of Latin American
governments but instead would institute other measures aimed at stability through economic development. A similar approach was advocated by Democratic President John F. Kennedy in March 1961 as part
of his ten year plan for economic development in Latin America called
the Alliance for Progress. Also, in April 1961 Kennedy disavowed the
legality of organizing military forces in United States territory for the
ultimately unsuccessful invasion of Cuba at the Bay of Pigs by Cubans
and Cuban-American citizens. Attorney General Robert F. Kennedy
on 20 April 1961 cited United States neutrality laws, some of which
were passed by Congress during the earliest years of the 1st republic
under George Washingtons tenure, stating that [T]he neutrality laws
were never designed to prevent individuals from leaving the United
States to fight for a cause in which they believed. . . . What the law does
prohibit is a group organized as a military expedition from departing from the United States to take action as a military force against a
nation with whom the United States is at peace.2
In 30 years under the 2nd republic there were 20 bilateral agreements between the United States and the Republic of Panama. In the
47 years under the 2nd democracy there were 133 bilateral agreements ratified between the United States and the Republic of Panama,
which does not include many that were aborted.3 Treaties signed in
1936 and 1955 abrogated significant terms of the 1903 Hay-BunauVarilla Treaty, opened Panama Canal and Canal Zone markets to
Panamanian businesses, and gave equal opportunity to Panamanian
citizens for employment. The 1977 Panama Canal treaties abrogated
all remaining provisions of the 1903 Hay-Bunau-Varilla Treaty.
2
3
Letter from Attorney General Kennedy (http://en.wikipedia.org/wiki/File:JFK.jpg)

HeinOnline (http://heinonline.org).
the panama canal under the 2nd democracy
221
1. Reorganization as the Panama Canal Company and Canal Zone

Government (19511979)
Effective 1 July 1951 by the terms of an executive order from Democratic President Harry S Truman, the Panama Canal was succeeded by
a new organization that separated remaining business operations and
transit services from civil government. All transit services and associated business operations of the Panama Canal were transferred to the
Panama Railroad Company, which was then renamed the Panama
Canal Company. Functions associated with civil government were
reorganized as the Canal Zone Government. The Panama Canal
Company was delegated the authority subject to Presidential approval
to set tolls. Prior to reorganization of the Panama Canal Company,
exclusive authority to set tolls rested with the President. Although the
Panama Canal Company and the Canal Zone Government were independent agencies of the United States federal government, their functions were still considered an integrated enterprise.
B. The Two Panamas During an Era of Social Rivalry
between Non-Elite and Elite from the 1930s to the 1960s
In August 1923, a political group called Accin Comunal (Community
Action) was officially formed in Panama by an urban professional class of
engineers, lawyers, doctors, and government bureaucrats. Arnulfo Arias
joined Community Action in 1930 and led it by advocating a brand of
cultural and societal nationalism called Panameismo (Panamanianism). Accin Comunal under Panameismo supported a political platform upholding the interior values of non-elite Panamanians of Spanish
origin against Panamanians of mostly African or Asian origin working
in the port cities, the maritime-commercial elite who owned real estate
and major commercial businesses, and finally, Americans working in
administrative and skilled positions in the Canal Zone.
Arias and Accin Comunal illustrates the complexity of the territorial-administrative rivals and maritime-commercial opposition within
Panamanian politics and the effect that their conflicts had on foreign
relations. Arias family came from Costa Rica in late 19th century and
Arias father settled in Penonom just west of the port cities where he
ran a small cattle ranch. The Arias family fit within the social and economic traditions of the territorial-administrative interior. Arias himself
was born in 1901 and attended preparatory school in New York. Like
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his brother Harmodio, Arnulfo was well educated in the United States
and studied medicine at Harvard University. Despite their educations,
neither Arnulfo nor Harmodio were elite by maritime-commercial standards and came from a middle echelon interior family.
Arnulfo Arias became president in 1940, 1949, and 1968, though for
various reasons in every case he was denied completion of his term
of office by Panamas National Police and National Guard. A major
source of Arias support included the day-laborers and skilled workmen in Panama City and Coln of mostly Hispanic origin, who had
come from the interior and competed for jobs and housing in the port
cities with people of mostly African or Asian origin. Another major
base of Arias political support in the interior of Panama included the
rural smallholders and cattlemen of Chiriqu, Cocl, and Veraguas. In
fact, Arias political rivalry with the Liberal factions of the maritimecommercial elite rested on both his positive and his negative political
relationships. Arias was supported by Panamanian laborers living in
the maritime cities with connections to the interior, non-elite interior
ranchers and farmers, and interior students against the presence of
American administrators and foreign immigrants in the maritime cities and the Canal Zone.
In January 1931, allegedly after repeated United States refusals to
intervene in Liberal President Florencio Arosemenas plans to suspend
the Panamanian constitution, Arnulfo Arias and other members of
Community Action felt they had to remove Arosemena themselves.
Arnulfo Arias colorful 1931 New Years Eve coup dtat, in which
according to one story he supposedly entered the Presidential Palace
late at night through a bathroom window that he himself had unlocked
while a guest at the party, was a watershed event in Panamanian history
because the United States refused to politically interpose itself. One
author suggests the following about the significance of the event:
While the use of force in Panamanian politics has been common since
the early days of the Republic, the coup of 1931 represented a watershed
in this respect in terms of the military restraint of the United States. The
resulting conclusion for Panamanian politicians was that the internal
sources of military power were going to play an increasingly important
role in politics.4
4
See Ropp (1982, 25) for his characterization of the significance of Arnulfo Arias
1931 coup.
223
Harmodio Arias was elected president in 1932 and for the first time in
Panamas history neither political party requested American intervention to guarantee civil order.5
Political parties followed the example of January 1931 and organized their own informal squads of armed civilians (pie de guerra) for
electoral intimidation. The use of armed civilians in the political arena
became common and the National Police were called upon to perform
the same role. A relatively modest force of no more than 1,000 men,
the National Police represented a part of the territorial-administrative
society of the interior. The National Police eventually emerged as the
arbiter of Panamanian elections under the leadership of Jose Antonio
Remn during the 1930s and 1940s.6
1. Civil Rights Protests and Arbitration by Threat of Police Force
after the 1930s
Civil rights are intended to protect individuals from unwarranted
government action and ensure participation in the civil and political life of the state without discrimination or repression. Civil rights
also touch on matters of discrimination in terms of opportunities for
equal employment and general financial welfare. One of the dilemmas with respect to civil rights is to what extent a centralized government can and ought to intervene in governance, private enterprise, or
other aspects of society in the name of protecting or advancing the
civil rights of a particular group of people who may have been discriminated against in some way. The period from the 1930s through
the 1960s in Panama could easily be characterized as a civil rights
movement against fractious coalitions of maritime-commercial elite
by both cross-society rivals and intra-society opposition.
1.1 Rivals and Opposition to the Maritime-Commercial Elite
The maritime-commercial elite faced four growing political liabilities
during the civil rights movement in Panama between the 1930s and
the 1960s. One political liability was the opposition, but occasionally
5
John Major, Prize possession: The United States and the Panama Canal, 19031979
(Cambridge: Cambridge University Press, 1993).
6
Phillips Collazos (1991, 33) said that By the 1940s, the power of the national
police was so strong that it had assumed the role of chief arbiter in the political
arena.
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alliance, with the lower echelons of maritime-commercial society,

Caribbean immigrants of mostly African origin who may have worked
for the Panama Canal as laborers but rented housing and purchased
goods from the maritime-commercial elites businesses in the port
cities. Another liability was the opposition of the middle echelons of
maritime-commercial society, immigrant foreign merchants representing ethnicities spanning the globe but particularly China and the
Middle East. A third liability was a cross-society rivalry with a growing working class of Panamanians of Spanish origin, some of whom
migrated from the interior but still maintained ties back to their home
provinces even though they lived in and around Panama City. Finally,
there was the continuing presence of American troops and an American civilian workforce under the jurisdiction of the United States in
the Canal Zone itself. Americans in the Canal Zone represented the
most visible symbol of the foreign exclusiveness and economic segregation of maritime-commercial society as a whole.
Within society opposition and cross-society rivals to the maritimecommercial elite were united in a general criticism that the outside
commercial world benefitted from the relative geographic location
of Panama much more than Panamanians did.7 Panamas elite benefitted from the direct, indirect, induced, and parallel commercial
activities associated with use of the Panama Canal and Canal Zone,
and national treaties with the United States seemed conspicuously
oriented towards expanding the elites wealth through control over
competing flows of imported goods into the Canal Zone and more
exclusive access to Panama Canal and Canal Zone markets. Foreign
jurisdiction over the Panama Canal and Canal Zone was symbolic of
pervasive domestic issues about Panamanian civil rights, labor rights,
and a more equitable redistribution of commercial wealth derived
from canal-related economic activities. Nonetheless, political factions
representing rivals and opposition to the maritime-commercial elite
came from different societies. They were not always agreed on whether
7
John Biesanz and Mavis Biesanz, The people of Panama (New York: Columbia
University Press, 1955), 121. In a speech to the National Assembly in 1951, Panamanian First Vice President Arosemena said, Geography has deceived us, making
us believe that our destiny was rooted in total surrender to our function as a land
of transit, without allowing us to consider that this function responds above all to
the needs of international commerce, nor that its undisturbed predominance put our
nationality in fief to exclusive foreign interests and left our economy unarmed against
the blows of changes in world traffic.
225
the issue was between the elite and non-elite, or between people in the
port cities and people from the interior. As a result, rivals and opposition from different societies asserted different and often conflicting
territoriality over civil and political life in Panama.
For instance, Liberal President Rodolfo E. Chiari (19241928) was
an Italian immigrant who built commercial enterprises based on sugar
and cattle production. Chiari used his political authority to control
competing imports through the Canal Zone and increase access to Panama Canal and Canal Zone markets for goods and services. Not surprisingly, Chiaris political support came from commercial merchants
in the port cities. However, Chiari also gained the electoral support of
small-scale rural merchants from the interior. Arnulfo Arias, on the
other hand, dramatized a concentration of commercial wealth in the
port cities and the presence of a foreign jurisdiction in the Canal Zone.
Arias also criticized as a side effect of foreign intrusion the racially
distinct Caribbean black influence that the Canal Zone introduced.
Ratification of Arias plebiscite for a new Panamanian constitution in
January 1941 aimed at disenfranchising the Caribbean black working
class and limiting the influence of immigrant South Asian and Chinese
shopkeepers in the port cities. The new constitution was also intended
to strengthen Panamanian culture of Spanish origin and establish an
interventionist Panamanian national government that would control sources of maritime-commercial wealth and contribute more to
the national treasury in order to fund economic development, public
health, and public education in the interior.
Another example of conflicting or overlapping territoriality by
rivals and opposition to the maritime-commercial elite were National
University and student federations. Students chose to assert a more
symbolic territoriality over the socially and economically segregated
environment of the port cities through protests and demonstrations
involving entering the Canal Zone and planting the Panamanian flag,
essentially nationalizing it. But did student federations even agree
amongst themselves about whether this symbolic gesture meant that
they intended to become a future class of powerful Panama Canal
administrators? Did the students want to become a new generation
of wealthy elite by eliminating the United States federal government
from providing goods and services so they could do so themselves
through family-owned businesses? Or did students think that all of
the wealth from the Panama Canal and associated activities had to
be taken out of the hands of private enterprise and nationalized by a
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strong central government that would re-direct it for the welfare of the
Hispanic cultural core of Panama in the interior?
1.2 The Aborted Kellog-Alfaro 1926 Treaty Between the United
States and Panama
The 1926 Kellog-Alfaro Treaty, which was signed 28 July 1926 but
never ratified, was the first major attempted modification of the 1903
Hay-Bunau-Varilla Treaty since the 1904 Taft Agreement. The treaty
dealt with two major issues. One issue was the neutrality and security
of the aerospace and maritime environment around the canal, consistent with the United States preventive posture against foreign threats.
Another issue was access to Panama Canal and Canal Zone markets
for Panamanian businesses, as well as controls over imports of goods
into the Republic of Panama through Canal Zone ports, consistent
with maritime-commercial elite interests.
The terms of the treaty stated that the Panamanian port cities were
to be free ports for vessels in transit or vessels in the service of the
United States in connection with the canal. Goods imported into the
Canal Zone for sale in the commissaries, to vessels in transit, or for
redistribution or re-exportation could not enter the Republic of Panama without paying import duties. The only exceptions were goods
purchased in Canal Zone commissaries by employees, contractors,
diplomatic agents, and their families who resided in Panama. All sales
of goods and services in the Canal Zone would be limited to officers,
employees, laborers, and contractors employed by the United States
federal government or by the Panama Railroad Company. The United
States agreed not to permit the establishment of any additional business enterprises, with a few exceptions. No one was permitted to rent
or lease property in the Canal Zone except officers, employees, laborers, or contractors employed by the United States federal government
or by the Panama Railroad Company. The United States also agreed
to continue to extend to private merchants in Panama certain facilities
in order to make sales to vessels in transit. The United States would
also provide space for Panamanian customs houses to collect duties
and inspect merchandise, baggage, and passengers bound for Panama
or Coln.
As for its neutrality provisions, the 1926 treaty stated that all air
stations other than those of the Republic of Panama were subject to
inspection by the governments of the United States and Panama. Any
227
aircraft other than those of the United States or Panama had to follow special rules and regulations. A controversial item was Article 11,
which stated that in case of war where the United States was a belligerent, Panama would automatically consider itself in a state of war.
Other terms of the treaty stated that Panama agreed to turn over wireless and radio communications and halt all aerial navigation in situations of threatened or actual hostility. Finally, United States armed
forces would have free transit throughout Panama in emergency situations given due notice. It is probable that the appearance of trading
commercial privileges for neutrality terms like Article 11 was the reason why the treaty was rejected by the Panamanian legislature. Independent of its rejection by the Panamanian legislature, in 1927 the
League of Nations determined that Article 11 violated League doctrine
by stating that in case of war where the United States is a belligerent
Panama will also consider itself in a state of war.
1.3 The 1936 Treaty of Friendship and Cooperation
The 2 March 1936 Treaty of Friendship and Cooperation, or HullAlfaro Treaty, was signed under the administration of President Harmodio Arias (19321936). Interestingly, the treaty was delayed in
Congress and would not be ratified by the United States until three
years later. Like the 1926 Kellog-Alfaro Treaty, the 1936 treaty concerned two important issues: neutrality and security of the aerospace
and maritime environment around the canal, and markets for Panamanian businesses including controls over imports of goods into the
Republic of Panama through Canal Zone ports.
The 1936 treaty abrogated key parts of the 1903 treaty. For instance,
the United States renounced the grant made to it in perpetuity for the
use, occupation, and control of lands or waters any more than those
already under its jurisdiction. However, both sides recognized there
was a joint obligation to insure the continuous operation of the canal
and to undertake agreements for additional land if necessary. In addition, Article 1 of the 1903 treaty guaranteeing the independence of
Panama was superseded. Goods destined for the Republic of Panama
were permitted to use the docking facilities of the Canal Zone ports of
Balboa and Cristobal, and likewise, goods destined for the Canal Zone
were permitted use of the Panamanian ports of Coln and Panama
City under the same conditions. The 1936 treaty contained provisions
restricting the commercial activities of the United States in the Canal
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Zone so that Panama could take advantage of commercial opportunities inherent in its geographical situation. Like the 1926 treaty, the
1936 treaty specified those who could reside in Canal Zone housing
and those who were entitled to make purchases in the Canal Zone
commissaries.8 Everyone else was required to rent housing and purchase goods and services in Panama.
The treaty agreed that any measures to safeguard the neutrality and
defense of the canal that appeared essential for one government to
take, but affected the jurisdiction of the other, would be the subject
of consultation. However, in case of emergency both governments
could take any measures of prevention and defense they considered
necessary for the protection of their common interests. The three year
delay in Senate ratification of the 1936 Hull-Alfaro Treaty was finally
broken by an exchange of notes clarifying this last provision regarding measures of prevention and defense. An exchange of notes dated
1 February 1939 stated the following:
[In] the event of an emergency so sudden as to make action of a preventive character imperative to safeguard the neutrality or security of the
Panama Canal, and if by reason of such emergency it would be impossible to consult with the Government of Panama as provided in Article
X of said Treaty, the Government of the United States of America need
not delay action to meet this emergency pending consultation.
After Senate advice and consent to ratification, the treaty finally

entered into force on 27 July 1939. The 1936 Treaty of Friendship and
Cooperation was eventually amended by the convention of 24 May
1950 and the treaty of 25 January 1955.
2. Political Arbitration by the National Police from the 1930s
to the 1950s
After the 1931 coup, President Harmodio Arias (19321936) appointed
Jose Antonio Remn Cantera, the only Panamanian who had formal
military training, to lead the National Police. During the 1940s and
1950s, Remn either used or was asked to use threat of force by the
National Police to become the ultimate arbiter in any serious executive
or legislative dispute between Panamanian political factions. When
8
See especially Thomas M. Leonard, The commissary issue in American Panamanian relations, 19001936 Americas 30 (1973): 83109.
229
Liberal factions among the maritime-commercial elite faced off against

Arnulfo Arias but became divided in their efforts to build a coalition
with other minor parties, Remn took advantage of the opportunity
and won the election himself in October 1952. Remn could trace his
family origins back to interior colonial Panamanian elite marginalized by the cyclic nature of the maritime transport economy.9 Remn
created the Institute of Economic Development and planned to build
roads into western Panama to support ranching and agriculture. One
author described Remns policies as oriented away from the society
of the port cities and towards the society of the interior:
[Remn believed in] produce what we consume; consume what we
produce, a poetic postulate bordering on romanticism that would not
have impact until an interior person managed the destinies of the country, and an interior person with an agricultural mindset and sufficient
spiritual independence to abandon the conviction that the capital city of
the republic is the nation . . . [Remn] created the Institute of Economic
Development . . . to force development and livestock raising in the country; two traditional activities of the Panamanian people . . . development
of this plan was based on the opening of a series of roads penetrating
the Cordillera Central (Central Mountain Range) . . . hoping to resolve
the problem of a scarcity of cultivable land in the region of the savannas
where the majority of the Panamanian population is to be found.10
One of Remns first acts in 1953 was to transform the National Police
into a larger, more highly-trained, and better-funded paramilitary
police force. It is generally known that the National Guard received
significant funding and training in Panama by United States military
forces so they would be prepared to prevent possible fascist or communist insurgencies in the Republic of Panama. For instance, the
National Police under Remn removed President Arnulfo Arias on
two occasions, once in October 1941 for his open support of fascist
governments, and another time in May 1951 when Arias suspended
the Panamanian constitution. In any event, the institution of the
National Guard continued to arbitrate allegations of election fraud or
unconstitutional maneuvers by the president throughout the 1940s,
1950s, and 1960s.
9
10
Ropp (1982, 27).

Alba (1967, 352).
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2.1 The Aborted 1947 Defense Sites Agreement

The 1947 Defense Sites Agreement was signed on 10 December 1947.
The treaty granted to the United States certain rights and authority
within defense sites and the air space above them. The treaty also gave
the United States the right to build or maintain telegraph, telephone,
radio, and other communication infrastructure that it would share
with the Republic of Panama.
The treaty agreed that the United States and Panama would appoint
a joint commission to consult on all matters concerning use of the
defense sites provided that matters of a purely military nature remained
under the jurisdiction of the United States. The treaty set the conditions
for the return of defense sites in which buildings and other construction could be removed but if left behind would become the property
of Panama. Article 5 of the treaty confirmed that Panama maintained
its sovereignty over the areas and air space as well as over all civil and
criminal matters, with the exception of United States civilian or military personnel connected with the operation of the defense sites. Other
terms of the treaty established annual compensation to Panama, and
reiterated the temporary nature of occupation of the defense sites and
principles for their timely evacuation. The treaty was rejected by the
Panamanian legislature in a unanimous vote.
2.2 The 1955 Treaty of Mutual Understanding and Cooperation
The next major modification of the 1903 treaty after the 1936 Treaty of
Friendship and Cooperation was the Treaty of Mutual Understanding
and Cooperation. Negotiations for the treaty proceeded under Remns
(19521955) administration but the final treaty was not signed until 25
January 1955, less than a month after Remns assassination. In connection with final treaty negotiations under Remns tenure, between
1953 and 1954 the United States and Panama agreed to a Memorandum of Understandings Reached. The memo spelled out not only
continued opportunities for Panamanian businesses in Panama Canal
and Canal Zone markets, but for the first time also included new equal
employment opportunities for Panamanians in United States federal
government positions related to the administration and operations of
the Panama Canal and Canal Zone.
For example, the memo provided that there would be a single wage
scale for a given category of position regardless of whether the position
was held by citizens of the United States or Panamanian citizens. However, only United States citizens would receive an overseas differential
231
and other allowances designed to offset some of the disadvantages

for non-residents. Congress would seek a uniform application of the
Civil Service Retirement Act to all employees of the United States federal government, whether they were citizens of the United States or
the Republic of Panama. Finally, equal opportunity for employment
was to be given to Panamanian citizens in positions for which they
were qualified, with opportunities for government-sponsored training
programs.
In terms of business operations and access to markets, the United
States agreed to put into practice a number of steps to enable Panamanian enterprises to take an increased share in supplying Canal
Zone markets, subject to competitive safeguards. The United States
also agreed to withdraw from the sale of supplies to ships with certain
exceptions. In addition, the United States agreed to withdraw providing any non-essential services to anyone who, even if employed by
the United States federal government, was either not a United States
citizen or not a resident of the Canal Zone. The United States further
declared it would terminate manufacturing and processing activities
if goods and services were available in the Republic of Panama at a
satisfactory price and in satisfactory quality and quantity. Finally, the
United States agreed to seek legislative authorization for construction
of a bridge across the canal at its Pacific entrance near the port of
Balboa adjacent to Panama City.
3. Civil Rights Protests Against the United States during the
1950s and 1960s
The National University was established in 1935 during the presidency
of Harmodio Arias (19321936). The National University was yet
another legacy of the January 1931 coup by Arnulfo Arias, an institution designed to sponsor non-elite political activism against the maritime-commercial elite.11 One historian of Panama suggests that the
university, and especially the Federation [of Panamanian Students],
became ladders for middle-and lower-class students who determined
to succeed economically, were willing to challenge the government in
the streets, and advocated a political program that was to the left.12
11
12
See Meditz and Hanratty (1987).

LaFeber (1989, 80).
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Students and members of the National Police and later National

Guard often clashed in the streets. In some cases where students
massed near the Canal Zone or American Embassy, i.e., at the intersection of the jurisdiction of Panamanian and United States security
personnel, the National Guard and United States troops communicated
and worked together to disperse crowds. Though speculation, one of
the reasons why organizations like the Federation of Panamanian Students (Federacin de Estudiantes Panameos) and the National Guard
clashed was that they were probably very different sorts of opposition and rivals to the maritime-commercial elite. The National Guard
was an institution rooted in the conservative Hispanic traditions of
the territorial-administrative interior but many of its members were
not necessarily ambitious and highly-educated. Student organizations
may have recruited people from lower and middle levels of maritimecommercial society, some with cosmopolitan philosophies including
fascist or communist leanings antithetical to the United States training
given to Panamas paramilitary police.
3.1 Panamanian Flag Raising Demonstrations in May 1958 and
October and November 1959
Student activists sometimes planned their demonstrations to coincide
with symbolic dates of independence, such as the anniversary of Panamanian independence from Spain or from Colombia, and planted
Panamanian flags in the Canal Zone as a form of territoriality. For
instance, on 2 May 1958 several students planted Panamanian flags in
the Canal Zone in a demonstration called Operation Sovereignty. In
many cases, both American and Panamanian authorities had advance
warnings of student demonstrations and took preventive action.
On 21 October 1959, with advance knowledge that a demonstration
would take place in the coming weeks, the United States Ambassador
made a formal request to the Government of the Republic of Panama
to take whatever steps were necessary in order to ensure public order.
Nonetheless, on 3 November 1959, which was the anniversary of
Panamanian independence from Colombia, approximately 150 people
tore down the American flag and destroyed property at the United
States Embassy and the offices of the United States Information Service. Groups that gathered to raise the Panamanian flag in the Canal
Zone became violent. In the absence of any Panamanian National
Guard support, the Governor of the Canal Zone called on United
233
States troops to prevent the crowd from entering the Canal Zone. The
next day, the Panamanian Minister of Foreign Relations responded
to an American Ambassadors protest by lodging a counter protest.
The minister alleged that the desecration of a Panamanian flag in the
Canal Zone and the use of American armed forces against unarmed
Panamanians were what had sparked the riots. Three weeks later on
28 November 1959, the anniversary of Panamas independence from
Spain, National Guard and United States troops cooperated together
to disperse a crowd attempting to enter the Canal Zone. Afterwards
the crowd focused its efforts away from the Canal Zone and a few
blocks of downtown Panama City were vandalized.
Shortly after the November 1959 incidents, on 2 December 1959
Republican President Dwight D. Eisenhower remarked, I do, in some
form or other, believe we should have visual evidence that Panama
does have titular sovereignty over the region.13 On 19 April 1960,
Eisenhower approved a nine-point program for improving relations with Panama over the Canal Zone. Several points focused on
improving the status of Panamanian labor in the Canal Zone with pay
increases, training, and placement of Panamanians in more skilled and
supervisory positions.
3.2 Panamanian Flag Raising Demonstrations in January 1964
On 17 September 1960, United States representatives agreed to allow
the Panamanian flag to fly beside the American flag in the area known
as Shalers Triangle in the Canal Zone. In 1962, President John F.
Kennedy agreed to add more locations flying both flags and in September 1963 the Governor of the Canal Zone selected seventeen sites
in the Canal Zone where both the United States and Panamanian flags
would be flown together. All other sites in the Canal Zone, including
high schools, were to have no flag at all.
Between 9 and 12 January 1964 large-scale demonstrations and riots
erupted in Panama City and Coln on the edge of the Canal Zone
after an attempted flag-raising incident at a Canal Zone high school by
Panamanian students, in which a Panamanian flag was torn. Within
the first days of the violence on 9 January 1964, representatives of the
Republic of Panama began drafting letters urging the intervention of
13
U.S. Congress (1977b).
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the Organization of American States and the United Nations. On 10

January 1964, the Panamanian representative to the United Nations
sent a letter to the President of the United Nations Security Council
asking for consideration of urgent matters between Panama and the
United States. Citing articles of the Universal Declaration of Human
Rights, the National Bar Association of Panama on 21 January 1964
petitioned the International Commission of Jurists Investigating Committee to examine allegations that United States troops violated the
human rights of citizens of the Republic of Panama during the riots.14
An official investigation of the 1964 riots was conducted by the
International Commission of Jurists and a synthesis of testimony and
facts about the 1964 Canal Zone riots is provided in the International
Commission of Jurists Report on Events January 912, 1964. According to the synthesis of testimony in the report, during the very early
hours of the rioting several calls were made by American authorities
to the Panamanian National Guard to control the violent crowd on the
border of the Canal Zone. The fact that most of the rioters in January
1964 were on the border of the Canal Zone, but not inside, meant they
were within the jurisdiction of the National Guard.
The report alleges the National Guard was deliberately kept away
from troubled areas in Panama City until after the riots had run their
course, somewhat similar to the situation on 3 November 1959 when
National Guard troops were absent and United States troops had to be
called. Panamanian National Guard troops were also completely disarmed during the riots, which allegedly was not standard procedure.
On the other hand, in Coln the situation was handled differently and
was more like the joint response to restoring public order during demonstrations on 28 November 1959. On the Coln side, members of the
Panamanian National Guard communicated and worked in tandem
with United States Army troops to disperse crowds from the edge of
the Canal Zone.
The International Commission of Jurists report suggested that for
whatever reason Panamanian officials did not direct National Guard
troops to control the crowd, and remarked that there was considerable evidence to indicate that broadcasts over radio, television and
14
The judgment of the ICJ was that there was no evidence the United States violated the human rights of Panamanian citizens during the 1964 Canal Zone riots. See
U.S. Congress (1977b, 11331134).
235
loud-speakers, newspapers, and other means were adopted to incite

and misinform the Panamanian public without any action by the Panamanian authorities to curtail or moderate such activities.15 The report
concluded vaguely that there was evidence of some degree of premeditation and planning by someone, since a large crowd was building
on the edge of the Canal Zone before the students had even departed.
Within half an hour after the high school altercation, the crowd had
grown to several thousand and had become more violent.16
The events leading to the January 1964 riots have received an inordinate amount of interest by contemporaries and later researchers.
Unfortunately, there has been little interest in comparing the January
1964 riots to earlier flag-planting incidents in 1959, describing the differences in how the National Guard responded in Panama City versus
in Coln on the Caribbean side of the Canal Zone, and most importantly, putting the riots into the context of the internal political crises
that were occurring in Panama between 1964 and 1968. For instance,
one author who examined the January 1964 riots in detail but not
in comparison to similar riots in 1959 said that although there was
a sometimes bewildering contempt for so-called standards of legal
principle, Panamanian activists cleverly exploited more informal,
atomized, and emotional forces within its own borders and in the rest
of the world.17 What were the emotional forces within Panama? What
explains the unwillingness of Panamanian authorities to control the
crowd in Panama City using the National Guard?
The most curious aspect of the entire incident has to be the fact
that the President of the Republic of Panama himself, Roberto Francisco Chiari Remn (19601964) of the National Opposition Union,
received the student delegation immediately upon their return from
15
The report stated, We regret deeply that the Panamanian authorities made no
attempt during the critical early hours, as well as for almost three days thereafter, to
curb and control the violent activities of the milling crowds. On the contrary, there
is considerable evidence to indicate that broadcasts over radio, television and loudspeakers, newspapers, and other means were adopted to incite and misinform the
Panamanian public without any action by the Panamanian authorities to curtail or
moderate such activities. See U.S. Congress (1977b).
16
U.S. Congress (1977b).
17
Alan MacPherson, Courts of world opinion: Trying the Panama Flag Riots
of 1964 Diplomatic History Vol. 28 No. 1 (2004): 83112. See MacPherson (2004,
112).
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the incident at the high school.18 The International Commission of

Jurists report said that either the Panamanian Presidents office or
Panamanian authorities in the Ministry of External Affairs had been
informed in advance of the students plans for a demonstration in the
Canal Zone. Why would a President of Panama choose to travel to
receive a group of student demonstrators holding a torn Panamanian
flag, rather than first doing whatever was necessary to restore public
safety and public order outside of the Canal Zone, which was under
his direct authority?
A reasonable speculation is that the reason why Chiari did not order
the National Guard to disperse the violent crowd during the January 1964 riots, and instead embraced the student demonstrators, was
because of the political movement that Arnulfo Arias was in the process of creating in anticipation of the May 1964 elections. In other
words, in an election year the political costs were too high for a challenged Chiari administration and National Opposition Union to do
anything other than receive the student delegation and call off the
National Guard, and then try to absorb and deflect the mass but certainly mixed political movement. Did the National Guard in Panama
City make a unilateral decision not to engage the protestors? Were the
people making inflammatory remarks over the radio and mass communications political supporters of Arnulfo Arias?
Less than a week before the outbreak of the riots, on 4 January 1964,
Arnulfo Arias organized a mass political demonstration in support of
his candidacy. If historical accounts are to be believed the demonstrations included as many as 50,000 participants who witnessed Arias
accept his Panameista Partys nomination as candidate for President
of Panama, i.e., rivals to the party of the incumbent Roberto F. Chiari.19
Election year civil unrest seems to have been very common in Panama
and usually required, in emergency situations, the threat of military or
police force to disperse crowds supporting political rivals and opposition. In any event, it is not likely the Chiari administration would have
been able to disperse a crowd of tens of thousands through threat of
intimidation, especially not if they were the ones appearing to support
the symbolic segregation of Panamanians from the territory and the
18
Roberto F. Chiari Remn was the son of former President Rodolfo Chiari and an
executive in the family sugar business.
19
Jorge Conte Porras, Arnulfo Arias Madrid (Panam: J. Conte-Porras, 1980, 182).
237
commercial wealth of the Canal Zone whereas Arias only a few days
earlier probably said he would do the opposite and nationalize the
Canal Zone immediately. Arnulfo Arias lost in the 1964 election but
claimed that the results were fraudulent and demanded a recount. Arias
also criticized newly elected President Marco Aurelio Robles Mndez
(19641968), chosen to succeed Chiari as the nominee of the National
Opposition Union, saying that he did not represent the true interests
of Panamanians in treaty negotiations with the United States.
3.3 The Aborted 1967 Treaties
In 1967, negotiators for the Republic of Panama and the United States
had reached an agreement on three treaties to replace the 1903 HayBunau-Varilla Treaty. The complicated 1967 arrangement is not elaborated here but its major focus was to change the Panama Canal regime
so that it would be run by a special corporation independent of either
government, but represented by an American majority on its board
of directors. The Republic of Panama never submitted the treaties for
ratification, thus they were never submitted to the United States Senate for its advice and consent. In a climate of civil unrest motivated
by political rivalry and opposition, especially by Arnulfo Arias, submitting any important canal treaty to the Panamanian legislature for
ratification would have been impossible.
4. Political Interventions by the National Guard during the
1950s and 1960s
4.1 The October 1968 Military Coup
The precise turning of events leading to the 11 October 1968 military
coup dtat by several officers of the National Guard and subsequent
reshuffling among National Guard officers and other Panamanian
political figures is complicated and has been explored by other authors.
The simple version is that Arnulfo Arias was confirmed as winning the
election for President in the May 1968 elections and assumed office
on 1 October. On his first day of office, Arias allegedly announced his
intentions to use his executive powers to remove his major rival and
major opposition all at the same time. Arias urgently called for the end
of United States jurisdiction over the Canal Zone, so as to nationalize
the Panama Canal and its associated commercial activities and control the source of his maritime-commercial elite rivals wealth. Arias
also ordered the reorganization and transfer of senior leadership of
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the National Guard, so as to eliminate the only credible threat of force

that might challenge his executive authority. Arias was removed from
office for a third time by the National Guard on 11 October 1968.
The National Guard leader who eventually emerged from the 11
October 1968 coup dtat, Omar Torrijos Herrera, is an example like
Remn of a paramilitary rival of the maritime-commercial elite from
the territorial-administrative interior. Torrijos came from the territorial-administrative core city of Santiago in the province of Veraguas
and was the son of a public school teacher. The territorial-administrative consciousness of the interior was cultivated in the National Guard
through a deliberate effort by Torrijos, to ensure the loyalty of the
infantry through cultural or regional ties.20 Torrijos and other officers of the National Guard through the mid-1970s did not cultivate
political relationships with maritime-commercial business interests in
Panama City and Coln. In fact, National Guard officers may have
practically meant to replace the maritime-commercial elite, as several
of his lieutenants were accused of profiting by illegally taxing goods
in transport.21
However, one of the reasons Torrijos emerged as the exclusive
leader of the National Guard was because although his labor code
reforms were directed against the wealth and economic leverage of
the maritime-commercial elite, he did not advocate radical redistributive measures. Torrijos did not support nationalization of private
businesses or foreign economic activities associated with the Panama
Canal Company in order to redistribute commercial wealth from the
port cities to claimants in the interior for agricultural development.22
Rather, Torrijos advocated measures that seemed to cut across societal
lines at its middle and lower echelon levels. For instance, the 1972
Labor Code intended to merge lower and middle echelon laborers
and merchants in the port cities with those in the interior through
labor unions.23 Finally, in terms of the continuance of United States
jurisdiction over the Canal Zone government, Torrijos policy was to
alarm but not antagonize the United States, especially with respect to
American priorities to prevent threats to the neutrality of the Panama
20
Ropp (1982, 48).

See Phillips Collazos (1991, 42) and Ropp (1982, 46).
22
Ropp (1982, 64) said that the period of the 1970s exacerbated the social gap
separating the National Guard from the business community.
23
Phillips Collazos (1991).
21
239
Canal and to the safety of American citizens working in the Canal

Zone.24
A closer examination of the period of military government by the
National Guard (19681981) under Torrijos and later manifestations
as the Panama Defense Forces under Manuel Noriega (19831989) is
well outside of the scope of this book. Suffice it to say that protests
by rivals and opposition to the maritime-commercial elite between
the 1930s and the 1960s were motivated by civil and labor rights in
terms of economic welfare and equal opportunity. During the military
government, the same sorts of civil rights protests would turn to civil
liberties. It is very well established that the paramilitary forces under
Torrijos and later officers like Manuel Noriega used deadly force and
threat of deadly force to intimidate their own rivals and opposition,
including individual Panamanians seeking civil liberties. Senior or
publicly visible rivals and opposition leaders were lucky if they were
allowed exile. Public protest against a non-democratically elected form
of government in print or in the streets in the name of civil liberties
and freedom of participation in government seems to have been dealt
with relentlessly and in some cases violently by the National Guard
under Torrijos.
C. The Two Panamas Under the National Guard Until 1981
1. An Internationalized Civil Rights Protest Against the
United States by the De Facto Military Government of the
Republic of Panama
1.1 The Tabling of Further Treaty Negotiations and the 1973 United
Nations Security Council Meeting
Special Representative of the United States for Interoceanic Canal
Negotiations David H. Ward testified before the House Committee
on Merchant Marine and Fisheries that negotiations looking towards
substantial changes in United States involvement with the operation
of the Panama Canal were in progress after the January 1964 riots.
Negotiations between the United States and Panama over the Panama Canal and Canal Zone resumed in June 1971 after the military
24
Carlos Guevara Mann, The Panama Canal: A historical background, 2003 (http://
collaborations.denison.edu/istmo/n07/articulos/canal.html).
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government had been established but took a different route by proposing to retain United States federal government operation and defense
of the Panama Canal for a fixed period and granting the United States
exclusive rights to construct a third set of locks or a sea-level canal. At
the same time, the Republic of Panama would begin to re-exercise its
civil jurisdiction in the Canal Zone. Private enterprise would replace
United States government services in the Canal Zone provided that
government employees were assured of necessary services. Particular
Canal Zone territories would be immediately returned to the jurisdiction of the Republic of Panama, including a substantial financial package. Ward said that there were serious differences on virtually every
major point.25 However, Ward believed that by 1971 the Torrijos government had decided not to continue to pursue bilateral negotiations
with the United States but instead work towards a Security Council
meeting in Panama City.
There was a long historical precedent for Panamanian representatives to ask for international arbitration with the United States. For
example, when Article 11 of the 1926 Kellog-Alfaro Treaty between the
United States and Panama was judged to have violated the League of
Nations charter, representatives of Panama requested that the issue of
sovereignty over the Canal Zone undergo international arbitration by
the League. The United States opinion at the time was that the Canal
Zone was a bilateral issue and would not submit to international arbitration.26 Thus it was not necessarily surprising when officials in the
Republic of Panama arranged for the United Nations Security Council
to assemble in Panama City in a special meeting to address United
States jurisdiction over the Canal Zone. Panamanian officials claimed
that the Canal Zone issue was a danger to peace and international
security and a proper subject for consideration by the Security Council. On 21 March 1973, during a special session in Panama City, the
United Nations Security Council voted on a draft resolution concerning future negotiations between the United States and the Republic
of Panama to replace the Hay-Bunau-Varilla Treaty. The Panamanian representative said that passing the draft resolution, in the form
in which it was being presented on 21 March 1973, would help the
25
U.S. Congress (1977b, 1473).

S. W. Meditz and D. M. Hanratty, eds., Panama: A Country Study (Washington,
D.C.: GPO, 1987).
26
241
Republic of Panama achieve its goal of incorporating the Canal Zone

politically, economically, and culturally with the rest of the country.27
Panamanian representatives referred to the Canal Zone as an
enclave that was foreign to the national jurisdiction, dividing Panamas territory into two parts, preventing the political, economic and
social integration of the country. The resolution received 13 affirmative votes (Australia, Austria, China, France, Guinea, India, Indonesia, Kenya, Panama, Peru, Sudan, USSR, and Yugoslavia), 1 opposed
(United States), and 1 abstention (United Kingdom). The resolution
was not adopted because of the negative vote of a permanent member
of the Security Council, the United States. At the time it was only
the third time ever that a representative of the United States had cast
a negative vote in the United Nations Security Council. Despite the
outcome of the vote, the Security Councils consensus remained that
the Canal Zone ultimately represented a bilateral issue and should be
settled between the United States and the Republic of Panama without
foreign intervention.
United States Ambassador to the United Nations John Scali, reflecting on the meeting, said that he had reservations about going to a
special meeting of the Security Council in Panama City outside of its
normal meeting place in New York City.28 Scali said that the group of
fifteen countries voting to have the meeting in Panama City instead of
New York was the result of persistent and skillful persuasion by Panamanian representatives. Scali also said that as a result of many, many
discussions behind the scenes with the Panamanian Foreign Minister
and twice with General Torrijos, he and the Panamanian representatives had come within five words of a resolution he felt he could
accept, meeting what he called the legitimate interests of the United
States and the just aspirations of the Republic of Panama. Scali then
said that after consulting with the Department of State as to what the
five remaining words could say and returning to see Foreign Minister
Juan Antonio Tack, he found that Tack had returned to the earlier
hard line resolution. At least in the opinion of Scali, the only explanation for Panamanian Foreign Minister Juan Antonio Tacks reversal
was that a decision had been made to, in his words, solicit a veto
from the United States.
27
28
U.S. Congress (1977b, 1453).

U.S. Congress (1977b, 1461).
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Explaining Foreign Minister Tacks actions during the 1973 Security Council meetings, Foreign Minister Nicolas Gonzalez Revilla confirmed to the Panamanian Assembly of Corregimiento Representatives
at Justo Arosemena Palace on 19 August 1977 that the foreign policy
objective of the Torrijos administration was to turn bilateral relations
with the United States into an international issue. Representatives of
the Republic of Panama had claimed that negotiations with the United
States were inherently unbalanced because of the power differential
between the two countries. Unless the United States was compelled to
abrogate the remaining articles of the 1903 Hay-Bunau-Varilla Treaty
due to outside political leverage the United States would never consent
to negotiate fairly.29
1.2 The 1974 Kissinger-Tack Statement of Principles
In the context of the end of the war in Vietnam and the Paris Peace
Accords of 1973, United States federal government ownership and control of the Panama Canal and Canal Zone were perceived as an embarrassing and anachronistic privilege reflecting poorly on the American
preventive posture of the 2nd republic. Between late November and
early December of 1973 and again in early January 1974, Ambassador
at Large Ellsworth Bunker visited with Panamanian Foreign Minister
Juan Antonio Tack in Panama to agree on general principles upon
which a new treaty might be based. A Statement of Principles was
signed between Republican President Richard M. Nixons Secretary
of State Henry Kissinger and Foreign Minister Juan Antonio Tack on
7 February 1974.30
The February 1974 Statement of Principles paved the way for the
1977 Panama Canal treaties. What was left unfinished after the Statement of Principles was filling in the details, including the exact time
period over which United States federal governments jurisdiction
in the Canal Zone would be terminated, the amount in dollars and
other benefits that the Republic of Panama would expect as part of
a larger share of the derived benefits of the Panama Canal, and what
privileges and obligations the United States might retain with respect
to canal neutrality after the termination date. The terms for future
improvements to the capacity of the Panama Canal, and perhaps a
29
30
U.S. Congress (1977b, 1451).

U.S. Congress (1977b, 14781479).
243
new sea-level canal although the wording is not specific, was also to
be incorporated into the new treaties. Perhaps the most interesting
part of the statement was the principle that the physiographic circumstances of the Isthmus of Panama were recognized as being a natural
resource belonging to the Republic of Panama.
D. American Territoriality and the 1977 Panama
Canal Treaties
Both the House and the Senate immediately began take action as a
result of the Statement of Principles in anticipation of a new round
of treaty negotiations. Between February and April 1974, several Congressional resolutions were submitted in the House and the Senate,
some in support of continued United States sovereign privileges in
the Canal Zone and others endorsing the February 1974 Statement
of Principles. The Watergate scandal and Nixons resignation on
9 August 1974 undoubtedly diverted attention from a new round of
treaty negotiations with Panama. However, on 21 October 1975, a bill
was passed by both the House and the Senate after several revisions
seeking to protect vital interests in the Canal Zone.
Democratic President Jimmy Carter was sworn in on 20 January
1977. On 7 September 1977, Carter and General Omar Torrijos signed
The Panama Canal Treaty and Treaty Concerning the Permanent
Neutrality and Operation of the Panama Canal (Neutrality Treaty)
at the Organization of American States headquarters in Washington,
D.C. About a month later, on 23 October 1977, a Panamanian plebiscite on the Panama Canal treaties was held and if the results are
valid the vote was 66.1 percent in favor of the treaties, 32 percent
opposed, and 1.9 void balloting.31
Treaty debate in Congress lasted continuously for 38 days and was
one of the longer debates in United States history, though it could
be pointed out that the 1936 Hull-Alfaro Treaty took three years for
the Senate to ratify. On 16 March 1978 the Senate gave its advice and
consent to ratification of the first of the two treaties, the Neutrality
Treaty, by a vote of 68 in favor and 32 opposed. Then on 18 April
1978, the Senate ratified the second of the two treaties, the Panama
31
U.S. Congress (197778, 3:687).
244
chapter eleven
Canal Treaty, also by a vote of 68 in favor and 32 opposed. Both treaties passed but with only one vote to spare. Because the Panama Canal
treaties implemented predominantly avoidant principles in place of
preventive ones, Senate debate became an occasion for reflection on
the balance of principles in American foreign policy.
From a strictly mathematical point of view, admittedly comparing apples with oranges, the Panama Canal treaties received slightly
more support in the United States Senate (68 percent) than they did
among the general voting population of the Republic of Panama (66
percent). Had the rules of the Panamanian plebiscite required a clear
two-thirds majority for ratification of a treaty, as was required by the
United States Constitution for the Senate, then the treaties would not
have been ratified in Panama.
1. Criticism of Avoidant and Preventive Ideals
Criticism either for or against ratification of the Panama Canal treaties in the United States Congress focused on the pitfalls of idealism
on both sides and to a lesser extent a conflict over the constitutional powers of the President with respect to transferring a United
States territory or possession, if the Canal Zone could be considered
as such.
General tendencies of policy regimes are not the only factors to
consider when it comes to American policy in Panama. Among other
factors might be a particular historical moment or the inclinations
of a particular President, such as whether he was prone to realism
or idealism, i.e., making policy decisions based upon things on the
ground or in his head. Excessive idealism in foreign policy regardless of which posture was being advocated has usually been doomed
to disapproval by the American public. A President excessively motivated by the ideals of avoidance and the perils of entangling alliances
in foreign lands and its resulting moral depredation is vulnerable to
the label of acquiescent. On the other hand, a President excessively
motivated by the ideals of prevention against a particular system of
government and its encroachment into the Western Hemisphere is
vulnerable to the label of paranoid.
During the signing of the Panama Canal Treaty and the Neutrality
Treaty on 7 September 1977, Torrijos praised the general principles
of the treaty. In idealist terms, Torrijos equated a preventive posture
245
with the pursuit of imperial strength, and an avoidant posture with the
pursuit of moral strength:
Basically what sustained the hopes of the Panamanian people and
strengthened their patience during all these years was the firm conviction that the people of the United States were not colonialists at heart,
because you yourselves had been a colony and had fought heroically for
your freedom. We feel that you, Mr. President, in raising the banner
of morality over our relations, are representing the true spirit of your
people . . . You have changed imperial strength into moral strength.32
Senator Clifford Hansen (R-WY) criticized the idealism of these sorts

of arguments as a play to the American conscience about the moral
high ground of an avoidant posture and the policies it inspired, versus
the moral low ground of a preventive posture and the policies it drove
in the past. Hansen said:
The new treaties have been held up to us as a chance to set an example
for the world in demonstrating our sincerity with regard to the sovereign rights of individual governments. Our presence in Panama has been
pictured as the last example of colonialism in the Western Hemisphere.
We are expected time after time to feel guilty for our presence there.
We have been told it is time to make amends for our past errors. I do
not buy that. It is dishonest to play on the conscience of the American
people and to thus ignore the fundamental questions involved . . . The
Panama Canal Zone is far too important an issue to be held up as a
testing ground; a kind of acid test.33
Idealism when it came to a preventive posture was also criticized. A

Washington Post article on 9 October 1977 called Canal treaties: The
maturing of America, stated that the United States could not let the
outcome of the war in Vietnam affect its negotiations with Panama
due to the ideal that American honor would be blemished by ostensibly giving up territory. The article said:
Without the treaties there would be no good reason for the Panamanian
government to act, and that nasty chore would fall to U.S. forces. With
both foreign and domestic news media branding U.S. actions as immoral
at best, and atrocities at worst, how effective could U.S. forces be? How
long would it be before the anti-Panama War critics would be marching
on the Pentagon, the White House and the Capitol? Conflict in Panama,
resulting from rejection of the treaties, would guarantee conditions that
32
33
U.S. Congress (1977b, 1512).

U.S. Congress (197778, 2:64).
246
chapter eleven
would shatter what little domestic tranquility has emerged in the aftermath of Vietnam and Watergate. In this respect, rejection of the treaties
is not in the national interest . . . A great nation cannot let the ghosts of
Vietnam go on delaying actions that are in the national interest because
some people fear our honor will be blemished by ostensibly giving up
territory.
On 14 October 1977, former Secretary of State Henry Kissinger testified before the Senate Foreign Relations Committee that the Panama
Canal and Canal Zone was not the issue to select in order to demonstrate the ideals of the American preventive posture given the outcome
of the war in Vietnam. Kissinger said:
I recognize the deep feeling of many Americans who wish, after the Vietnam tragedy, to see an end to yielding and retreat by the United States.
No one can appreciate such concerns better than one who strove for
an honorable outcome during the Vietnam period. But the canal is not
the issue to select to demonstrate that we remain strong and resolute.
Panama is the smallest and weakest of nations. We are not giving the
canal to Panama; we are, rather, ensuring our ability to protect it.
Senator Joe Biden (D-DE), a member of the Senate Foreign Relations

Committee, recognized the need for a preventive though less ideal
point of view about maritime nodes and links reminiscent of Alfred
Thayer Mahan during the 2nd republic. Biden questioned the impact
that the Panama Canal treaties could have on United States capabilities to ensure maritime security over its use of ports and sea lanes in
the Caribbean and the Pacific. Biden said:
It seems to me that the really critical issue is whether we can control not
the actual passage in the canal as much as we can control entrance to
and exit from that canal. That is why the area is a crucial one. The issue
is one that goes beyond this hearing and the floor debate . . . .[if ] the neutrality treaty is ratified, does that mean we will weaken our position in
the Caribbean. Are we weakening our position with regard to control of
the Caribbean and the immediate Pacific Ocean to the west of the canal.
That is what worries and concerns me.
Somewhat of a side issue, concern about the treaties also turned on

whether the Presidents actions were constitutional without the consent of the House. The decision of the Supreme Court in Wilson v.
Shaw in 1907 was invoked during the Panama Canal treaties debate
by Republicans in the House of Representatives who felt that they, not
just the Senate, had a constitutional role to play. Republican California
Governor Ronald Reagan was of those who advocated against ratifica-
247
tion of the Panama Canal treaties on constitutional grounds, asserting

that the Canal Zone was a territory or possession of the United States.
According to constitutional procedure, the president did not have the
power to cede territories without House approval. Reagan said that he
had spent time reading and studying legal cases and opinions about
the powers of the United States federal government in the Canal Zone
and felt that because the Canal Zone was practically a territory of the
United States it could be equated with the Louisiana Purchase and
Alaska, undoubtedly relying on the Supreme Courts 1907 decision in
Wilson v. Shaw. Reagan testified before the Subcommittee on Separation of Powers of the Senate Judiciary Committee saying only one
nation can exert sovereign rights over a given piece of land at one
time, and the 1903 treaty made it clear that we would do so in the
Canal Zone and that the Republic of Panama would not.34 Reagan
continued by explaining why rejection of the treaty was, at least in
his mind, necessary as a means to a larger preventive end: It is no
secret that the Soviet Union believes control over some 16 vital sea
lane choke points means dominance of the worlds oceans. Our presence at one of the busiest and most important of those choke points
is a definite deterrent.
E. Conclusion
Territoriality over the environment of Panama during the 2nd democracy (1930s1970s) was an interaction between 1) a predominantly
avoidant American posture when it came to use of the constitutional
powers of the United States federal government in foreign territory to
administer and operate the Panama Canal, and 2) lower and middle
echelon rivals and opposition to the maritime-commercial elite in
Panama who engaged in a civil and labor rights dispute against the
elite and the United States federal government simultaneously over
equal opportunity and redistribution of wealth from economic activities associated with the Panama Canal and Canal Zone. The most
important treaties during this period of political rivalry and opposition were signed by Panamanian administrations that came to power
34
U.S. Congress (197778, 3:632633)
248
chapter eleven
through a coup dtat and maintained control and order over their
political rivals and opposition by threat of paramilitary force.
For instance, Harmodio Arias was the beneficiary of Arnulfo Arias
coup dtat in January 1931. After winning the 1932 elections he
appointed Jose Antonio Remn Cantera as his chief of the National
Police, an institution that through intimidation and threat of deadly
force arbitrated Panamanian political elections. Under Arias the 1936
Hull-Alfaro Treaty was signed. Remn himself then was elected President in 1952 when Panamas conventional political parties were in
disarray, almost like a coup dtat. After winning the 1952 presidential
elections, Remn created the National Guard as a more professional
institution of intimidation and then paved the way for the signing of
the 1955 Treaty of Mutual Understanding and Cooperation. One of
the officers of the new National Guard was a man named Omar Torrijos. Torrijos assumed sole leadership of the National Guard after the
October 1968 military coup dtat and then signed the 1977 Panama
Canal treaties. Of course, the story does not end there as one of the
senior officers of the National Guard under Torrijos was a man named
Manuel Noriega. The disintegrating political situation between Panamas maritime-commercial and territorial-administrative societies
eventually led to a malevolent Panamanian military dictatorship by
Manuel Noriega.
The avoidant-minded regime of the 2nd democracy (1930s1970s)
disentangled the United States from whatever tacit alliances had existed
with Panamas elite maritime-commercial society via the 1903 HayBunau-Varilla Treaty. By signing the 1977 Panama Canal Treaty and
the 1977 Treaty Concerning the Permanent Neutrality and Operation
of the Panama Canal, the 2nd democracy ended exclusive American
jurisdiction over the Panama Canal and Canal Zone while reserving
exclusive American control over its neutrality. In effect, the Presidents
and Congresses of the 2nd democracy split their 2nd republic predecessors preventive posture for an American canal under American
control into two parts. An American canal had meant that the dayto-day ownership, administration, and operations of the Panama Canal
were based in areas under United States jurisdiction. The first of the
two 1977 Panama Canal treaties relinquished this role. A canal under
American control had meant that the United States federal government exercised exclusive powers over neutrality, which was retained
by the second of the two 1977 Panama Canal treaties. Thus a hybrid
249
avoidant-preventive posture unfolded as a Panamanian canal under

Panamanian control under normal situations, and under American
control in emergency situations. The principles of a situational canal
under American control were part of the 1936 Hull-Alfaro Treaty and
even the rejected 1947 Defense Sites Agreement. More importantly,
the same principles might even be found in the 1901 Hay-Pauncefote
Treaty giving the United States exclusive control as the only nonadjacent maritime power with the right to enforce the Panama Canals
neutral and free use.
CHAPTER TWELVE
THE PANAMA CANAL AND THE TWO PANAMAS UNDER

THE 3RD REPUBLIC (1980?)
Transportation During the 3rd republic (1980?)
1. Reorganization and Reservations After the Panama Canal Treaties
Following ratification in April 1978, the avoidant terms of the Panama
Canal treaty started a process of reorganization and withdrawal of the
jurisdiction of the United States federal government over the Panama
Canal Company and Canal Zone Government. The Panama Canal
Company and Canal Zone Government were reorganized as a transitional Panama Canal Commission (19791999) until 31 December
1999 when all ownership and operations would be transferred to
Panama.1
The Panama Canal Commission was a wholly owned government
corporation in the Executive Branch of the United States under the
Secretary of Defense and the Secretary of the Army. The Commission was composed of a board of directors with nine members, five of
whom were United States citizens appointed by the President and four
were Panamanian citizens proposed for appointment by the President
of Panama. Authority over routine operations of the Panama Canal
was given to a Panamanian Administrator, assisted by an American
Deputy Administrator. Canal operations were reviewed by Congress
annually and were expected to continue to be self-financing. Revenues from tolls and other activities were deposited in an account in
the United States Treasury called the Panama Canal Revolving Fund,
which was available to the Panama Canal Commission for its operations and programs.
The Treaty Concerning the Permanent Neutrality and Operation
of the Panama Canal was a longer term proposition. The treaty gave
1
The Panama Canal Commission was created by the Panama Canal Treaty of 1977
and constituted by the Panama Canal Act of 1979 and Public Law 9670 of 27 September 1979, as amended by other public laws.
252
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the United States unilateral rights of interposition against threats of

aggression against the free and neutral use of the Panama Canal in
emergency situations. The amendment to the treaty, the DeConcini
reservation named after Senator Dennis DeConcini (D-AZ), attached
the following statement with respect to Article IV:
Under the Treaty Concerning the Permanent Neutrality and Operation
of the Panama Canal (the Neutrality Treaty), Panama and the United
States have the responsibility to assure that the Panama Canal will
remain open and secure to ships of all nations. The correct interpretation
of this principle is that each of the two countries shall, in accordance
with their respective constitutional processes, defend the canal against
any threat to the regime of neutrality, and consequently shall have the
right to act against any aggression or threat directed against the Canal
or against the peaceful transit of vessels through the Canal. . . . Notwithstanding the provisions of Article V or any other provisions of the treaty,
if the canal is closed, or its operations are interfered with, the United
States of America and the Republic of Panama shall each independently
have the right to take such steps as each deems necessary, in accordance
with its constitutional processes, including the use of military force in
the Republic of Panama, to reopen the Canal or restore the operations
of the Canal, as the case may be.2
The DeConcini reservation was an understanding to the treaty clarifying that when it says the United States and Panama have the responsibility to assure the Panama Canal will remain open and secure to ships
of all nations, it meant that both nations each independently had
that responsibility, including the use of military force in the Republic
of Panama in situations such as acts of aggression or threats directed
against the canal.
The same general principle appears in the 1936 Treaty of Friendship
and Cooperation as an exchange of notes. In fact, like the DeConcini
reservation, the 1939 exchange of notes to the 1936 treaty was what
had finally broken a three-year deadlock in Senate consideration of
the treaty. One could even suggest the same general principle can be
found in the 1850 Clayton-Bulwer Treaty and the 1901 Hay-Pauncefote
Treaty. Both were agreements designed to clarify whether two nonadjacent maritime powers would each guarantee the free and equal use
of a Central American canal over the jurisdiction of the adjacent state,
or whether it would be just one, the United States alone.
33 UST Panama-Canal Neutrality Sept. 7, 1977.
the panama canal under the 3rd republic
253
The legality of the DeConcini reservation might have been debatable

had it not been attached to a mutual agreement between the nonadjacent power and the adjacent state. There is evidence that President
Jimmy Carter lamented the inclusion of the DeConcini reservation in
terms of the foreign policy ideals he wanted to present, but it did spell
out for both parties what had clearly been a longstanding intention by
the United States as a non-adjacent maritime power to prevent threats
to the neutrality of the canal over the sovereign jurisdiction of the
adjacent state. In October 1977, prior to the Panamanian plebiscite on
the Panama Canal treaties in a Panamanian television interview Torrijos himself would say, And this is the peace which I am going to
take to my grave that I do not leave a canal which is greatly coveted
by the whole world without knowing that a great power is obligated
to come to its defense.3
B. The Two Panamas Under the Panamanian Defense
Forces Until 1989
1. Political Dissent Against the De Facto Military Government and
American Military Intervention in December 1989
During the signing of the Panama Canal treaties on 7 September 1977
in Washington, D.C., Omar Torrijos added:
We have agreed upon a neutrality treaty that places us under the protective umbrella of the Pentagon. This pact could, if not administered
judiciously by future generations, become an instrument of permanent
intervention.4
Torrijos would probably never have imagined that it would be practically his own generation of Panamanians and the successor to his
command over the National Guard, Manuel Noriega, who would activate use of the neutrality treaty to justify American intervention in
December 1989.
Explanation of any event in history usually includes elements of
background causes, facilitating causes, and precipitating causes. Discovery of new facts puts one in a position to pose challenging alternate possibilities to official investigations. What is interesting is when
3
4
U.S. Congress (197778, 5:48).

U.S. Congress (1977b, 1512).
254
chapter twelve
a researcher can convincingly handle new information and suggest

conclusions that put the actions of those who precipitated an event
into the context of what facilitated those actions. What is rare and
particularly exciting is when a researcher can explore not only what
precipitated or facilitated an event but how things unfolded against a
background that hardly anyone had considered.
A number of journalists and researchers of contemporary affairs
have been motivated to find new facts about why the administration
of Republican President George H. W. Bush decided to opt for the
use of military force against General Manuel Noriega and the Panamanian Defense Forces (Fuerzas de Defensa de Panam). Why was
Panama unable to transition to a democratically-elected government
undeterred by the intimidation of the National Guard and Panama
Defense Forces after Torrijos death in a plane crash in 1981? What
sorts of relationships existed between Noriega and Presidents Ronald
Reagan and George H. W. Bush with respect to other covert operations in Central America? What event or series of events ultimately
soured that relationship in favor of the decision for military intervention in December 1989? In any event, in his justification for military
invasion in December 1989, Bush referred to but did not highlight
threats to the free and neutral use of the Panama Canal by vessels in
transit. Instead, Bush highlighted his concern for the safety of American citizens living in the former Canal Zone.
Many researchers look beyond American military intervention to the
origins of Panamas military government. Generally speaking, American military intervention in December 1989 is considered a reversal
of the coup dtat in October 1968. Some experts on Panama contend
that the post-1968 period of reformist military government had been
more representative of Panamas population and put it back in step
with independent Latin American governments untainted by a history of American intervention.5 In other words, few if any other Latin
American governments were dominated by a maritime-commercial
elite leadership. This remains a question for debate. An analysis matching the base of Panamas political parties in the past with the social
and geographic characteristics typical of those oriented to the activities of the maritime-commercial or territorial-administrative society is
not within the scope of this book but awaits any scholar familiar with
Ropp (1982).
255
the geographic histories of Omar Jan Surez and Alfredo Figueroa

Navarro, and armed with the theoretical implications of Edward Foxs
history of French politics.
A few authors writing about contemporary Panama have taken Jan
Surezs original analysis of Panamanian history as the basis for their
argument.6 They suggest Jan Surezs historical analysis of Panamas
urban elite demonstrates that they were socially, economically, and
geographically alienated from the population of the interior of Panama.
After United States military forces reinstated democratically-elected
President Guillermo Endara on 20 December 1989, Panamanian
politics supposedly fell back to the political rivalries among mostly
maritime-commercial elite. In fact, the December 1989 invasion was
alleged to have reset Panamanian politics to a situation all the way
back to what had existed before the 1931 coup dtat by Arnulfo Arias.
Many authors take the viewpoint that growing political opposition and
rivalry in Panama between the 1930s and the 1960s stemmed from the
fact that the maritime-commercial elite were never a legitimate ruling
class because of their social and economic alienation from the interior.7
In support of their observations, these researchers note that the maritime elite relied on wealth acquired from foreign transport services,
failed to diversify their economic control over the interior country
with a broader economic development strategy aimed at agricultural
production or cattle ranching, and preferred to cultivate close relationships with foreign merchants and administrators. The nature of the
alliance between the United States and the maritime-commercial elite
was that the United States gave the elite economic jurisdiction over the
Canal Zone including a monopoly on the supply of goods and services,
plus support against internal rivals and opposition, in return for which
the Panamanian maritime-commercial elite allowed the United States
federal government to continue to exercise jurisdiction in Canal Zone
territory over matters of public health, public safety, and security.
In short, the Panamanian political elite were supposedly an enclave
society that maintained political power because of United States support until the 1968 election of Arnulfo Arias and the military coup by
the National Guard finally replaced the elite with a more representative
6
Peter Szok, Beyond the Canal: Recent scholarship on Panama Latin American
Research Review 37 no. 3 (2002): 247259.
7
Zimbalist and Weeks (1991, 137).
256
chapter twelve
and more genuinely Panamanian government even despite the fact

that the military government was not democratically elected. Several
experts would suggest that this enclave understanding of Panamanian
elite politics explains its peculiarities such as the personalistic factions
and the lack of nationalist coalitions in the interior, and also explains
how the bureaucratic/merchant elite dominated Panamanian elections for the presidency and the legislature by controlling powerful social networks like the National Council of Private Enterprise
(CONEP), and the most exclusive social network, the Union Club in
Panama City.8
Did American intervention support the political dominance of the
maritime-commercial elite? For that matter, did the lack of American
intervention after 1931 erode the political dominance of the maritimecommercial elite, who were then beholden to internal paramilitary
police forces? Are cosmopolitan political elite oriented to maritime
commerce in the port cities and who shun conventional nationalist
sentiments unless pressed to do so publicly an aberration of foreign
dependency on the United States, i.e., an enclave-dependent society?
Critical arguments suggest that Panamas maritime-commercial elite
regimes have always been disconnected from most of the rest of the
country, geographically from the interior and socially from the lower
echelons of society in the maritime cities, resulting in Panamas political history of dependence on the United States until 1968, and after
1989. What many authors do not consider is that the maritime-commercial elite of the Republic of Panama may be considerably more
geographically and historically adapted from the environment of the
Isthmus of Panama and from a long history of political dealing with
adjacent centralizing or territorial-administrative governments and
with non-adjacent maritime powers.
C. The Two Panamas after the Abolishment of the
Panamanian Defense Forces
1. The Abolishment of the Panamanian Defense Forces
Constitutional reforms in February 1990 by President Guillermo
Endara, affirmed by the Panamanian legislature in October 1994,
abolished the Panamanian Defense Forces and replaced it with the
8
See Ropp (1982).
257
Panamanian Public Forces. A standing army was prohibited as had

been the case after Panamas independence in 1904. The Panamanian
Public Forces to date represent a combination of police, investigative,
border control, and maritime security personnel under the control of
the executive branch of government.
2. The Panama Canal Authority (2000date)
The legal framework of the Panama Canal Authority derives from
Title XIV of the Panamanian Constitution, Act No. 19 of 11 June
1997 (a.k.a., the Organic Law), and various regulations adopted by the
Board of Directors of the Panama Canal Authority. The Panama Canal
Authority is headed by an Administrator and a Deputy Administrator under the supervision of an eleven-member Board of Directors.
The Administrator, as the chief executive officer, is appointed for a
period of seven years but can be reelected. The Panama Canal Authority exercises an exclusive legal right to use its assets for the administration, operation, maintenance, and modernization of the Panama
Canal and associated canal services within the Canal Operation Compatibility Area. The Canal Operation Compatibility Area is a specific
geographic area in which only activities compatible with the operation
of the Panama Canal are permitted. The area includes the immediate
area of the line of the Panama Canal, its Atlantic and Pacific entrances
and anchorages, the ports of Cristobal and Balboa, the three locks, the
Gatun Dam, portions of Gatun Lake, the Culebra Cut area, Miraflores
Lake, and other surrounding areas.
The annual reports of the Isthmian Canal Commission (19001914)
and the Governor of the Panama Canal (19141951) are painfully
detailed including statistical facts about Panama Canal operations and
a description of just about every event in the Canal Zone. The reports
descriptions include things like how much money to the penny was
collected selling ice cream to exactly how many million feet of movie
film had been shown during the fiscal year. An early summary from
a 1920s annual report even catalogs for us the reactions on the faces
of people from the Palo Seco Leper Asylum, the Corozal Hospital for
the Insane, and the Gamboa Stockade who had never seen a movie
before.
The annual reports of the Panama Canal Company and Canal
Zone Government (19511979) and the Panama Canal Commission
(19791999) present a terse and nonchalant narrative that sticks to
the most neutral descriptions about transit statistics and routine canal
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operations, maintaining a steady tone even during the crisis in 1989.

In late 1989, as invasion seemed more and more imminent, Panama
Canal Commission employees were under intense and varied political
intimidation and had to be transported to work by boat, paid for by
the Commission, because they were prevented from renewing their
vehicle license plates.
By contrast, the Panama Canal Authoritys (2000-date) annual
reports and website present an exuberant self-report of its own performance and its menu of canal services. The Panama Canal Authority
stresses its dedication to its international customers but balances that
with narrative and imagery conspicuously illustrating Panamanian
nationalism. For instance, the cover of the English language version
contains the ever-reproduced black and white photo of two young
people during the January 1964 Canal Zone riots climbing over a
chain-link fence with Panamanian flag in hand.
The sharpest difference between the organization of the Panama
Canal under the Panama Canal Authority, and under various entities
of the United States federal government, is that the Panama Canal
Authoritys operations are all mixed together as a set of integrated
business services. Under American jurisdiction, the philosophy was
to regard the work as a public franchise with three separate functions
including canal operations, business enterprises, and civil government.
Canal operations were associated with the dredging, locks, and navigation divisions. Services and commercial businesses were associated
with the Panama Railroad Company. Civil society was associated with
the office of the Governor of the Canal Zone and its various offices
and departments.
Evoking the repertoire of Panamas maritime commercial society,
under the Panama Canal Authority canal operations, business services, and even to some extent civil society are mixed together as a
spatially adjacent cluster of economic services in order to provide
the highest possible quality of canal services at a negligible per unit
cost to its global shipping customers. However, evoking the repertoire
of Panamas territorial-administrative society, the goal of the Panama
Canal Authority is also maximizing the Panama Canals revenues and
contributions to the National Treasury.
259
2.1 The Panama Canal Authority and Foreign Enterprises

Some of the preventive principles of the 2nd republic about private
enterprises falling into the hands of foreign governments continued to
surface during the 3rd republic. For example, a United States House
of Representatives hearing in 1995 focused on potential Chinese government involvement in Panama Canal operations after the official
turnover by the United States on 31 December 1999.9 Published in the
House hearing documents were statements by former Commander-inChief of the Pacific Fleet Admiral Thomas H. Moorer, who pointed out
that the lessons learned from Alfred Thayer Mahan about the interaction between commercial and strategic considerations in the Pacific
Ocean were being lost. Moorer said strategic nodes underlying and
necessary to the operation of our two ocean and forward deployed
strategy in times of conflict were being encroached upon by China.10
Other evidence of American preventive postures with respect to
foreign companies controlling Panama Canal port and harbor operations come from two 1997 articles in the Washington Times reporting
that former Republican Senator Majority Leader Trent Lott of Mississippi was concerned about possible connections between Hutchison
Whampoa Ltd., a Hong Kong ports company that won the contract
to maintain and operate portions of Panama Canal operations over an
American company, and the Chinese Peoples Liberation Army.11
Like similar non-transfer clauses that date back to the Panama Railroad Companys contract with New Granada, Title XIV of the Panamanian Constitution states that the Panama Canal and its operations
cannot be sold, transferred, mortgaged, or in any way either encumbered or alienated from the Republic of Panama to a foreign interest.
Thus the Panama Canal Authority is the sole legal entity with jurisdiction over the Panama Canal. The Panama Canal Authority even maintains financial autonomy from the Republic of Panama and manages
its own financial assets.
9
U.S. Congress, House, Subcommittee on the Western Hemisphere, U.S. strategic interests in Panama: Hearings before the Subcommittee on International Relations,
104th Cong., 1st sess., 9 March 1995 (Washington, D.C.: GPO, 1995).
10
U.S. Congress (1995, 58).
11
China company grabs power over Panama Canal, Washington Times, August
12, 1997: A1; and U.S. wont allow China to close Panama Canal, Washington Times,
August 13, 1997: A1.
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2.2 The Panama Canal Authority and Tolls

As of 2 September 2009, the Panama Canal Authority had adopted
nearly 200 agreements and regulations on everything from tolls and
maritime services to watershed regulations and the proposed third set
of locks project. In addition to its exclusive role within the Panama
Canal Compatibility Area, the Panama Canal Authority is responsible
for water resources of the greater Panama Canal drainage area.
The original system for Panama Canal tolls dates to 1912. Toll-able
tonnage was calculated without regard to the type of vessel or the
value of its cargo, considering only whether the vessel was laden with
commercial cargo or passengers; laden with ballast only, i.e., heavy
non-commercial material positioned to ensure the vessels stability at
sea; or in the case of other floating craft such as warships, charged
on the basis of displacement tonnage, i.e., the actual weight of the
sea water that a floating vessel displaces. Figure 19 shows Panama
Canal toll revenues plotted against total cargo transited in long tons
since 1945.
The tonnage measurement system used in the Panama Canal today
is known as the Panama Canal/Universal Measurement System (PC/
UMS), based on the rules of the International Maritime Organizations
International Convention on Tonnage Measurement of Ships adopted
23 June 1969 and entered into force 18 July 1982. In order to determine
what toll a ship has to pay to transit the Panama Canal, vessels have to
present a certificate identifying the gross tonnage (overall size of the
ship) and net tonnage (useful capacity of the ship) that conform to
definitions in the International Convention on Tonnage Measurement
of Ships. In October 2002, the Panama Canal Authority adopted a new
toll structure for the Canal. The October 2002 regulations created different rules for measuring toll-able tonnage by vessel type and vessel
size. In May 2005, the Panama Canal Authority differentiated rules for
container ships and vessels carrying containers on their decks, using
the TEU twenty-foot equivalent unit measure.
3. The Third Set of Locks Project and Panamanian Political Values
Article 325 of the Constitution of the Republic of Panama, amended by
Legislative Act No. 1 of 27 July 2004, gives the Panama Canal Authority the right to propose to the Panamanian Executive branch the building of either a sea-level canal or third set of locks. The Panama Canal
19. Tonnage and toll revenues from Panama Canal operations 19452008

261
262
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Authority proposed a third set of locks in Agreement No. 112 dated 24

April 2006. Any proposal either for a sea-level canal or a third set of
locks executed by the Panama Canal Authority, or through contracts
with private companies, has to be approved by the Executive branch of
Panamas government, after which it has to be submitted to the Legislative branch, and then finally, submitted to the Panamanian people
for a vote of approval or rejection through a public referendum. A
public referendum was held on 22 October 2006 and was voted on by
924,029 Panamanian citizens representing just over 43 percent of the
total electorate. The referendum passed by the vote of 705,284 (76.3
percent) in favor to 201,105 against (21.8 percent).12
3.1 Maximize Payments to the National Treasury
The Panama Canal Authority has four main objectives for the Third
Set of Locks Project. The first objective of the Third Set of Locks Project is to be able to sustain and increase the Panama Canals contribution to Panamanian society through its payments to the National
Treasury. The second objective is to maintain the canals direct, indirect, induced, and parallel contributions to Panamas maritime services cluster. The third objective of the Third Set of Locks Project is
to be able to capture more tonnage away from competing routes across
several market segments of maritime traffic. Finally, the fourth and last
objective of the Third Set of Locks Project is to make the operations of
the Panama Canal itself safer, more productive, and more efficient.
The four objectives of the Third Set of Locks Project invert the
objectives of similar Panama Canal improvement projects under
the jurisdiction of the United States such as in 1939, 1967, and 1981.
The objectives of the Panama Canal under United States jurisdiction
were to make the operations of the Panama Canal safer, more productive, and more efficient. No objectives articulated any entrepreneurial
motives to capture a greater share of different market segments using
the Panama Canal. Finally, no objectives were ever stated to increase
Panamas national economy or payments to Panamas National
Treasury.
It does not escape notice that the Panama Canal Authoritys Agreement No. 112 dated 24 April 2006 lists the same four goals but in a
12
Referendum data, 2006 (http://www.tribunal-electoral.gob.pa/referendum/index
.html).
263
different order, beginning with increasing the Panama Canals market

share; making the canal more productive, safe, and efficient; sustaining its contributions to the National Treasury; and finally, maintaining
the canals competiveness, with special mention of the fact that building a third set of locks will enhance the services cluster of Panamas
national economy. Nevertheless, the official first objective of the
Panama Canal Authoritys Third Set of Locks Project is to be able to
sustain and increase the Panama Canals contribution to Panamanian
society through its payments to the National Treasury.
Is the first objective of the Third Set of Locks Project simply a
national goal? Or is it motivated to satisfy the political values of
Panamas territorial-administrative society of the interior as well as
the lower or transitional middle echelons of Panamas maritime-commercial society? It was important that the funding option approved
for the Third Set of Locks Project by Panamanians in the 22 October 2006 public referendum be considered not only a sound but an
equitable initiative benefitting the full social and geographic spectrum
of the Panamanian population, regardless of whether they lived in
the savannas of the Azuero Peninsula, further in the western interior
in Chiriqui, on the less-populated Caribbean coast, or in the lowest
income areas of Panama City.
For example, during its first six years of operation from January
2000 to September 2005, the Panama Canal Authority advertised the
fact that its operations had directly contributed $2.463 billion to the
Panamanian National Treasury. The Panama Canal Authority mentions that for reference the $2.463 billion contributed to the National
Treasury, though not necessarily earmarked for public infrastructure,
exceeded what the Republic of Panama spent as a whole on infrastructure between 2000 and 2004 including schools, roads, irrigation
systems, hospitals, health centers, and bridges. In addition, the nearly
$500 million contributed to the National Treasury each year represents more than is collected from import taxes, twice as much revenue
as the Republic of Panama collects from personal income tax, and five
times what is collected in property taxes.
Nonetheless, an interesting question for the Panama Canal Authority is whether the investment in the $5.25 billion Third Set of Locks
Project will pay for itself, when that will occur, and how that will
occur. As a result of increases in tolls implemented at the same time
that the Third Set of Locks Project was authorized, and a result of projected likely traffic and external financial sources, the Panama Canal
Authority expects increased revenues as a result of the Third Set of
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Locks project will repay external financing in eight years or less, i.e.,
by the year 2022.
Since its opening in 1914, the Panama Canal under varying organizations has operated under conditions where total revenues from tolls
and other sources just barely covered total expenses (see Figure 20).
Net income was basically zero after payments on the interest-bearing
capital investment and payments to Panama. A detailed breakdown of
the financial situation of the Panama Canal between 1914 and 1951,
when growth in transits was flat instead of constantly increasing, illustrates how unprofitable even business operations like the commissaries
were. The Panama Canal was barely able to pay the interest on its capital investment let alone the principal. The saving grace for the Panama
Canal to pay off a $400,000,000 capital investment by Congress was its
reorganization in 1951, in which much of the Panama Canals interestbearing capital investments were depreciated.
Unlike the United States Congress in 1904, the Panama Canal
Authority has to pay off its investment through direct payments over
a specified period of time, and likely not through accounting measures like depreciation. The Panama Canal Authority has not clarified whether its $5.25 billion investment will merely ensure that the
Panama Canals $500 million per year in contributions to the National
Treasury will not decline, or when its contributions to the treasury
will increase and by how much. For the Third Set of Locks Project to
be successful there may need to be an increase in contributions to the
National Treasury, above and beyond the estimated $500 million per
year the Panama Canal already contributes after debt payments have
been subtracted.
3.2 Stimulate Maritime Services Cluster and the Economic System of
the Canal
The second stated objective of the Panama Canal Authoritys Third
Set of Locks Project is to maintain the canals competitiveness and
its ability to contribute through direct, indirect, induced, and parallel ways to Panamas maritime services cluster, in other words, the
modern repertoire of Panamas maritime-commercial society. The
maritime services cluster refers to activities that are geographically
close together . . . and at the same time, economically complementary,
and the Panama Canal Authority recognizes four categories of clusters
20. Revenues, toll revenues, and expenses from Panama Canal operations from 19142008

265
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in roughly three geographic areas around the Panama Canal and the
maritime port cities.
One cluster of services lies within the Canal Operation Compatibility Area under the jurisdiction of the Panama Canal Authority. Immediately adjacent to the Canal Operation Compatibility Area is another
cluster of services, activities, and infrastructure within the jurisdiction
of the Interoceanic Region Authority.13 Finally, an even more all-encompassing envelope of services around the Canal Operation Compatibility Area and the Interoceanic Region lies within the jurisdiction of
the Republic of Panama in the traditional domain of Panamas maritime-commercial society, including the financial services organizations
clustered in the central business districts and upscale neighborhoods
of Coln and Panama City.
The Panama Canal Authority estimated that in 2000 the economic
services clusters of the Panama Canal employed 24.3 percent of the
total national workforce and represented $3.411 billion in economic
activity, representing 36.4 percent of Panamas GDP in 2000. The estimate is the sum of four categories of economic activity, described in
a straightforward way as flows of money into the domestic economy
including direct, indirect, induced, and parallel to long-distance maritime flows of goods and people carried in vessels in transit through
the Panama Canal.
As described very early in the book, the direct flows of money to
the Panamanian economy are a result of activities related directly to
canal operations including workers wages, payments to the National
Treasury, and local purchases. The indirect flows are a result of commercial activities and services related to provisioning vessels in transit
including shipping offices, fuel bunkering services, vessel repair and
maintenance, launch services, dredging, pilots, and other services provided to ships crews and passengers. The induced flows of money to
the Panamanian economy are the result of commercial activities in
the Coln Free Trade Zone, most of the activities in the ports, tourism operators, logistics, the railroad and other intermodal services,
export processing, maintenance of containers, and ground transportation; which are determined more by Panamas public policy and global
13
The Interoceanic Region Authority (ARI) was created 25 February 1993 in order
to administer former Canal Zone properties transferred to the Republic of Panama by
the United States under the terms of the 1977 Panama Canal treaties.
267
commerce than directly related to transits through the Panama Canal.

Finally, the parallel flows of money to the economy are a result of the
relative location of the Isthmus of Panama and Panamas monetary
system including shipping, flags of convenience, banking, finance,
insurance, legal services, airports, merchant marine, telecommunications, maritime courts, and other services.
4. The Two Panamas and the Labor Rights Dispute Against the
Panama Canal Authority by Rivals and Opposition of the Elite
4.1 No Right to Strike by Employees of the United States Federal
Government
The Panama Canal Authority says that once the Panama Canal reaches
its maximum sustainable capacity any increase in profits could either
come from an increase in tolls, which could cause an irreversible loss
of market share, or from reductions in its operational costs. Reductions in operational costs would affect the salaries and employment of
Panamanian skilled and unskilled labor. Although the Panama Canal
Authority mentions the possibility of having to reduce its operational
costs, it does not predict what would happen if it were forced to cut
salaries or employment benefits of its Panamanian labor force.14
Former Panama Canal Commission Administrator Alberto Alemn
Zubieta said in 1997 that because the canal provided an international
service it could never fail to function due to domestic labor differences.15
Alfonso Regis, the president of the Association of Canal Employees
(ASODECO), said it would be a serious error to allow workers their
constitutional right to strike if it put the operational fate of the canal
and the interests of the world in the hands of a few workers over a few
dollars.16 ASODECO representatives conceded that as former employees of the United States federal government they have never worked
14
U.S. Congress (1995, 35). Mark Falcoff testified to the House Committee on Foreign Relations that Panama does have a fairly high unemployment rate for a country
of its level of development, and now President Perez Balladares has talked about or
is suspected of wanting to modernize the canal administration, and there already are
labor problems developing because there is fear, I do not know how well justified, that
if he is able to win a second term he is going to fire a large number of canal employees
to try to keep expenses down.
15
Ley de la Autoridad del Canal debe resolver conflictos laborales El Universal de
Panam [Panama City, Panama], March 18, 1997.
16
Sera un grave error aprobar derecho a huelga en el Canal La Prensa [Panama
City, Panama], November 24, 1993: 14A.
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with the right to strike so therefore nothing is changed but others

claim that workers will not have the guarantees and protection that
American laws offered for the resolution of labor conflicts, which is
exactly why they need the right to strike.17
Title V of the United States Code states that an individual may not
accept or hold a government position if they participate in a strike or
assert the right to strike against the government of the United States.
Despite the fact that canal workers do not have the right to strike
they have exercised other labor actions tantamount to a strike. In
August 1973, in response to the firing of five Panama Canal pilots
over a relatively minor incident, the rest of the Panama Canal pilots
either under-performed in their duties or actually went on strike it is
not clear followed by several other employees. The fired pilots were
immediately reinstated and canal operations resumed. On 20 March
1976, in response to a series of austerity measures including a proposal
to reduce U.S.-rate employees wages and benefits to those of employees paid at local Panamanian rates, there was an eight-day sickout
of U.S.-rate Panama Canal employees including pilots, lock operators,
teachers, and other workers.18 For comparison, there have been several
instances of vessels in transit through the Panama Canal sinking in the
channel or catching on fire in the locks, which in most cases resulted
in a delay in service lasting several hours. The eight-day March 1976
sickout represented the most serious interruption in canal service
since a major landslide occurred near the Culebra Cut in 1915 affecting canal operations for six months.
4.2 A Constitutional Right to Strike by Citizens of the Republic of
Panama
Labor negotiators for Panamanian employees of the Panama Canal
Authority have already asserted that all Panamanians have a constitutional right to strike, with certain restrictions for employees in public service. Attorney-General (La Procuradora de la Administracin)
Alma Montenegro de Fletcher and the Panamanian Supreme Court
disagreed, stating that Panamanian canal workers do not have the
17
Piden al la Asamblea legislar contra el derecho a huelga en el canal in El Universal de Panam [Panama City, Panama], March 20, 1997: B1.
18
See Michael Murphy, Anthrax strike: The 1976 outbreak of labor militancy in
the Panama Canal Zone, 2005 (http://www.serve.com/CZBrats/Builders/anthraxstrike
.htm#_ftnref81).
269
right to strike. Although the Panamanian Constitution recognizes the

right the strike, it also recognizes that the law will regulate its exercise and subject the right to strike to special restrictions in the public
services that it so determines.19
The Panama Canal Pilots, a skilled and essentially irreplaceable
component of Panama Canal operations, printed a position piece in
the Panamanian newspaper La Prensa on 25 May 1996 stating that
putting the constitutional rights of canal laborers in the hands of the
Panama Canal Authorities Board of Directors would create a veritable Pandoras Box in terms of labor conflicts,
We have already expressed our idea that the labor formulas of the new
Constitutional Title compels the Law that refers to canal labor matters, ought to contain specific and detailed guidelines, if what is to be
desired is to develop such constitutional precepts relative to labor. . . . If
all the rights of canal laborers remain held in the hands of the [Board
of Directors of the Panama Canal Authority], to the detriment of its
Regulations, we would be creating a veritable Pandoras Box in terms of
labor conflicts in the Canal. From their first day, those Regulations could
be changed and reformed at the discretion of the [Board of Directors]
and whatever its 11 directors are going to be thinking. This permanent
insecurity is not a propitious climate for a labor relationship that has
as its object the Stable, Secure and Permanent functioning of the Canal
[Authors translation].
One representative of a Panama Canal captains and pilots organization

called the right to strike a universal as well as a constitutional right.20
The pilots representative speculated that if Panama Canal Authority
employees were not permitted to exercise their constitutional right to
strike then tomorrow other workers in Panama would lose their right
to strike, and offered a plan whereby only 50 percent of the workers
could strike leaving the other half to operate the canal, similar to the
terms of the Labor Code.21
Jorge E. Ritter, President of the Panama Canal Transition Commission and a former board member of the Panama Canal Commission,
admitted that the issue over the right to strike was the only one that
19
Reiteran prohibicin de huelga en el Canal de Panam El Universal de Panam
[Panama City, Panama], May 11, 1997: 1A.
20
Prohibicin de huelgas en el Canal se mantiene en firme La Prensa [Panama
City, Panama], May 6, 1997: 1A.
21
No hay derecho a huelga en el Canal: Ritter La Prensa [Panama City, Panama],
April 23, 1997.
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did not gain the desired consensus. However, he defended the necessity to suppress a Panamanians constitutional right to strike and
explained that the constitutional right to strike in the Labor Code does
not apply to the Panama Canal because Article 316 of the Organic Law
of the Panama Canal Authority placed it under a special labor regime.
Ritter suggested that the Panama Canal Authoritys labor code would
be completely different than the regime that governed Panamanian
public employees and the Labor Code.22 Panama Canal Authority
executives were questioned by reporters about the Authoritys separate
labor regime whether it was tantamount to asserting its own separate territory or republiquita around the line of the Panama Canal like
the United States federal government did for a century, and whether
there was any danger of the future administrative organism of the
Canal becoming a new empire or a little republic due to the excessive autonomy that was conceded.23
D. Conclusion
Territoriality over the environment of Panama during the 3rd republic (1980?) was an interaction between 1) a predominantly preventive
American posture when it came to use of United States military forces
in foreign territory to protect the free use and neutrality of the Panama
Canal, and 2) a unified lower, middle, and elite rivalry and opposition
against the increasingly rogue territorial-administrative power of the
Panama Defense Forces in pursuit of civil liberties and participation in
governance without intimidation or threat of deadly force.
The preventive-minded regime of the 3rd republic (1980?) demonstrated a resolve to exercise exclusive American control over its neutrality. By invoking the 1977 Neutrality Treaty in the December 1989
invasion, the regime of the 3rd republic (1980?) set a precedent for
United States intervention or interposition. The word intervention
normally suggests use of military forces to prevent threats of aggression
against the Panama Canal including threats from sub-state or non-state
militants both domestic, e.g., dictators, or foreign, e.g., international
22
Obreros del Canal no se regirn por el Cdigo de Trabajo La Prensa [Panama

City, Panama], December 24, 1995: 1A.
23
Trabajadores del Canal deben mantenerse en sus puestos El Panam Amrica
[Panama City, Panama], October 14, 1993: 5A.
271
terrorists. A number of maritime security agreements and partnerships

between the United States and Panama treat international terrorists
and possible interdiction against transportation of weapons of mass
destruction in American waters. For instance, Panama is a participant
in the 2003 Proliferation Security Initiative launched by Republican
President George W. Bush, part of the December 2002 United States
National Strategy to Combat Weapons of Mass Destruction. Serious
disruptions in Panama Canal service due to labor disagreements, not
threats from sub-state or non-state militants, would be more likely to
provoke some form of future extraterritorial legal interposition of the
United States into the affairs of the Panama Canal Authority and its
employees through the 1977 Neutrality Treaty.
CHAPTER THIRTEEN
THE FUTURE OF THE PANAMA CANAL

AS AN ARTIFICIAL STRAIT
A. Changes in Panamas Environment and Competition
from Other Routes
Does this book suggest that narrow water passages are inhabited by a
set of circumstances that dooms human history to repeat itself in the
future? The answer, of course, is no or as Mark Twain would say
history doesnt repeat itself, at best it rhymes.1 However, if one can
recognize the combination of the three circumstances of environment,
flows, and territoriality in the past then one can speculate about how
expected changes in one set of circumstances over the next several
decades could likely affect other circumstances.
The ancient physical environment of the Isthmus of Panama, once
a natural strait, was already well-suited for an artificial strait. The
human-built environment of the Isthmus of Panama has been physically modified in three major phases over the last four centuries from a
system of rivers and trails, to a railroad, and then finally to a canal with
locks. The Panama Canal Authoritys Third Set of Locks Project is of
a scale and expense that compares as a fourth major phase of physical
modification of the Panamanian environment to facilitate flows. What
about a fifth major physical modification for the Isthmus of Panama?
The Panama Canal Authority used simulations of vessel traffic based
on a number of variables and assumptions in order to understand
how long its proposed changes to the human-built environment, i.e.,
the Third Set of Locks Project, would maintain the Panama Canals
competitive earning potential. The models go as far as the year 2025.
What happens after 2025? Will the Panama Canal have to undergo
another round of major environmental modifications in order to handle increased traffic, e.g., a second set of deeper and wider channels?
Dr. Leonard J. Hochberg, personal communication to author, 2009.
274
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Holding that possibility aside, what about competition from other

routes putting Panama Canal traffic into decline?
It is not certain whether any of the billions being invested in highspeed passenger rail corridors in the United States could lead to highspeed goods transport, becoming a competitor to the Panama Canal.2
As for other maritime routes, the Panama Canal Authoritys judgment
was that they would not face competition from the Northwest Passage
over any near time frame that they could estimate. However, a warming global climate could change circumstances in the physical environment of the Northwest Passage making it safer and more cost effective
to put into place the necessary human-built environment infrastructure for international navigation on a regular basis. There are inherent distance-saving advantages in use of the Northwest and Northeast
Passages over both the Panama and Suez Canals when it comes to
flows between ports in the North Atlantic and the North Pacific. For
instance, vessels leaving London bound for ports in East Asia would
save half the distance of a route through the Panama Canal.3 Even a
sea-level canal as wide and deep as what once naturally existed across
the Isthmus of Panama would still be at a significant disadvantage in
terms of distance-saved for North Atlantic and North Pacific ports.
The top six climate change prediction models for Arctic Ocean ice
predict global climate change will likely clear the Arctic Ocean of summer ice as early as 2037.4 A 2004 Arctic Marine Transport Workshop
warned that if model projections about the continued thinning of sea
ice in the central Arctic Ocean are realized, and vessel traffic increases,
security issues could be compounded. However, participants at the
workshop were divided about the economic drivers behind use of
the Arctic Ocean for international navigation given the current lack
of a human-built environment to facilitate flows. In order for shippers
to decide to use the Arctic Ocean routes instead of the Panama Canal
or Suez Canal, it would mean large scale global investments of escort
vessels, aids to navigation and staging ports to transfer cargo between
2
Michael Cooper, Slice of stimulus package will go to faster trains New York
Times, February 19, 2009 (http://www.nytimes.com/2009/02/20/us/20rail.html?_
r=1&scp=3&sq=&st=nyt).
3
Based on the authors own GIS (Geographic Information System) calculation
using a ratio of cost distance in a North Pole Azimuthal Equidistant projection.
4
Pharand (1984) did not present his study of the Northwest Passage in the context
of regional impacts of global climate change, evidence for which at the time of his
book was not nearly as clear as it is at present.
the future of the panama canal as an artificial strait 275

ice strengthened and non ice strengthened ships. Apparently, not
even the Canadian maritime transportation industry is focused on use
of the Arctic Ocean as an alternative to the Panama Canal, either now
or within the next 10 to 20 years.5
But again, what happens after 20 years? If model simulations are at
all close to accurate then the probability is that environmental conditions in the Arctic Ocean will have reached the point where use of
the Northwest Passage could be made safe and efficient enough to be
an economically viable competitive summer alternative to the Panama
Canal or Suez Canal in about 30 years.
1. Changes in Flows Due to Economic Depressions or Other Events
Each built environment across the Isthmus of Panama such as the
Spanish rivers and trails, the Panama Railroad, the original Panama
Canal and lock system, and now the Panama Canal with a third set
of locks experienced an ascending phase followed by a descending
phase. The Panama Canal and its 1914-era lock system was due to
experience a descending phase in terms of the capacity to deliver optimal levels of service sometime between 2009 and 2012 unless major
steps were taken to enhance the interior and entrance channels and
construct a larger additional set of locks.
Each built environment in Panama facilitated a different distribution and abundance of flows of goods, passengers, finance, and messages. The Spanish rivers and trails transported finance in the form
of silver bullion from the Pacific coast of South America to Spain.
The Panama Railroad transported passengers and freight between the
Atlantic and Pacific coast of the United States. Before World War II,
coastwise flows of goods carried in general cargo vessels between the
Atlantic and Pacific coasts of the United States were the main source
of toll revenue for the Panama Canal. After World War II and until
very recently, flows of unfinished goods conveyed in specialized bulk
carriers between the East and Gulf Coast of the United States and
East Asia were the top source of toll revenue. Over the past decade or
so, specialized vessels carrying finished goods in containers between
5
Institute of the North, U.S. Arctic Research Commission, International Arctic Science Committee, Arctic Marine Transport Workshop (Anchorage, Alaska: Northern
Printing, 2004), 89.
276
chapter thirteen
East Asia and the United States have emerged as the top source of toll
revenue.
The Panama Canal Authority uses simulation models assuming continued global economic growth to assert that the abundance of global
flows will increase and that their distribution will continue to favor use
of the Panama Canal, i.e., as long as the East Coast of the United States
continues to import goods produced in the Pacific Rim. However, specialized vessels do not pay tolls on the same basis; it depends on the
type of ship. Even with assumptions of constant economic growth and
increases in vessel traffic, if there are any changes or unanticipated disruptions in the markets for goods thus changing the specialized vessels
that use the Panama Canal, the Panama Canal Authority would have
to be prepared to consider one of two things. On the one hand, the
Panama Canal Authority could revise the methods it uses for assessing tolls in order to increase revenues, i.e., revise its territoriality over
flows. On the other hand, the Panama Canal Authority could implement austerity measures to decrease its expenses, i.e., based on its territoriality over its own employees and operations, or fail to increase its
payments to the Panamanian National Treasury, i.e., based on the lack
of territoriality of the Republic of Panama over the wealth generated
by the Panama Canal Authority. Some of these territorial considerations are reviewed and then considered below.
B. Panamanian Societies and American Policy Regimes
The most unpredictable set of circumstances about the Panama Canal
is the overlap in territorialities between adjacent and non-adjacent entities. When extraterritorialities from a non-adjacent entity in form of
American policy regimes and the territorialities of adjacent entities
in the form of Panamanian societies are introduced into the same
environment, it is like when a reagent is introduced into an organic
substrate. Sometimes when a reagent is introduced nothing happens.
At other times, the reagent reacts with something in the organic substrate resulting in a chemical reaction like fizzling or smoking.
When adjacent and non-adjacent territorialities over a strait are
mixed together it can cause a reaction. The non-adjacent and adjacent entities can decide to change the properties of their territorialities in response, i.e., through treaties. When there are breakdowns in
international relations, the situation can become volatile the longer

that the two territorialities remain mixed together. One can get carried away with the analogy but the point is to examine the properties
of American and Panamanian territorialities separately, and then in
combination.
1. A Look Back at Territoriality and American Policy Regimes
Examination of the properties of American territoriality took us
seemingly far afield into the historical background of transportation
improvements in the United States and American geopolitics since the
1780s. Yet without understanding American territorial enlargement
and consolidation of territory through transportation improvements,
one would only be in a position to judge rather than actually understand where differences in American policy over the Panama Canal
and Canal Zone like those between Theodore Roosevelt and Jimmy
Carter come from. American representatives have been in a gradual
back and forth process of changing their minds about the Panama
Canal and Canal Zone in terms of what they felt should or should not
be under the exclusive domain of the United States, using a system
of federal jurisdiction originally developed for the transcontinental
railroads.
Over half-century periods, American political representatives have
been motivated by either a predominantly avoidant or preventive
posture: avoid the consequences of entangling alliances with foreign
nations, or prevent the consequences of foreign threats to the general welfare and common defense. An avoidant or preventive posture
applied to different levels of extraterritoriality over the Panama Canal
and Canal Zone. Avoidant or preventive postures could apply to dayto-day jurisdiction over ownership, administration, operations, and
maintenance. Avoidant or preventive postures could also apply to
major geopolitical situations affecting neutrality and free use.
In predominantly preventive regimes, representatives of the United
States were willing to use the constitutional powers of the federal
government in foreign territory to control everything from day-today canal operations to neutrality, in order to prevent a European
takeover. In predominantly avoidant regimes, representatives of the
United States demonstrated little or no willingness to use the constitutional powers of the federal government in foreign territory to control the canals day-to-day operations in order to prevent a European
takeover. However, even during predominantly avoidant policy regimes
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American representatives insisted on either an exclusive or a no less

than equal role in protecting the canals neutrality. Still, the preventive polices put in place by Hayes and Theodore Roosevelt during the
2nd republic were partially reversed by avoidant policies of Franklin
D. Roosevelt and Carter during the 2nd democracy, representing just
one long phase and counter-phase of American foreign policy over
interoceanic communication.
2. A Look Back at Territoriality and Panamanian Societies
Examination of the properties of Panamanian territoriality took us
far afield into the historical and geographic background of Panamas
maritime-commercial and territorial-administrative societies. Without
understanding the differences between and among Panamanians of the
interior and the port cities, one would not be in a position to understand the political impacts of two Panamas maneuvering for control
of one state. Panamanian political rivals and opposition groups have
disagreed about who were rightful claimants as opposed to actual
beneficiaries of the wealth generated by the Panama Canal and Canal
Zone. Changes in the properties of Panamanian territoriality over the
Panama Canal and Canal Zone resulted from changes in the balance
of power between the maritime-commercial elite and the non-elite of
Panamas territorial-administrative and maritime-commercial societies between the 1930s and the 1960s, resulting in an abrupt shift to a
territorial-administrative military government between the 1960s and
the 1980s, and then an abrupt shift back to the maritime-commercial
elite after December 1989.
As Panamanian territoriality over the Panama Canal and Canal
Zone changed its properties due to more open participation by representatives of the two Panamas in the social, political, and economic
life of the state it began to react against the elements of an American
preventive posture. American preventive extraterritoriality during the
2nd republic (1870s1920s) created a canal under American control
in terms of the day-to-day jurisdiction and neutrality. However, the
changing properties of American postures from preventive to avoidant
during the beginning of the 2nd democracy (1930s1970s) significantly affected Panamanian territoriality, as is generally understood
with respect to lack of American intervention leading to the 1931 coup
dtat. In the absence of an interventionist United States, only those
Panamanian administrations that could manage the increasingly frac-

tious political dimensions of the two Panamas were successful, and so
order was maintained by threat of paramilitary police force.
The important modifications to the 1903 Hay-Bunau-Varilla Treaty
in 1936 by Harmodio Arias, in 1955 by Jose Antonio Remn Cantera,
and in 1977 by Omar Torrijos, were ratified under administrations that
gained power through a veritable coup dtat and intimidated their
political rivals and opposition through their control over Panamas
increasingly professionalized paramilitary police. In every other case
when modifications to the 1903 Hay-Bunau-Varilla Treaty or other
important agreements were signed with the United States by Panamanian administrations that could not manage order and control over
rivals and opposition, for instance, such as in 1926, 1947, or 1967,
those agreements were rejected by the Panamanian legislature.
Some authors see American intervention in 1989 as an anachronism reminiscent of American policy during the first two decades
of the 20th century. In some respects, that might be true. The predominantly avoidant posture of the United States during the 2nd
democracy (1930s1970s) came to an end and a new predominantly
preventive policy regime emerged, the 3rd republic (1980s?). In
the interim between the political rise of Panamas paramilitary police
between Harmodio and Arnulfo Arias during the 1930s and Manuel
Noriega during the 1980s, a new policy regime had emerged in the
United States. The 1977 Neutrality Treaty was invoked as part of
United States military intervention in 1989, resulting in the military
destruction of the Panama Defense Forces and then its legislative abolishment in 1994.
3. A Look Forward to the Beginning of an Internationalized Labor
Rights Protest Against the Panama Canal Authority
In the 1906 Isthmian Canal Commissions annual report, President
Theodore Roosevelt asked the commissioners to look into a series of
allegations made in an article published in the Independent called Our
mismanagement of Panama. The articles author reported several disturbing events he claimed were based on knowledge gained during a
trip to Panama. The article alleged, among a number of things, that the
United States federal government had used taxpayers money to ship
a vessel full of Caribbean black women to work as prostitutes for the
canals manual labor workforce. It was a spectacular allegation. It was
also completely false. The moral of the story in mentioning this article is
280
chapter thirteen
not to look at its factual basis, but its politics. Was the article intended
as a form of criticism about preventive policies like Roosevelts as the
end justifying the means? Was a canal under American control a great
work of engineering achievement in foreign territory, but one that
was built on morally corrupt politics, racialist dealings with a foreign
labor force, and deaths due to disease and poverty? These are the sorts
of back and forth issues that have preoccupied the American public
about the Panama Canal.
Panamanians of the interior and of the port cities have been preoccupied with the wealth and status of the Panama Canal and its
associated economic activities, including issues about who are its real
beneficiaries versus who should be its rightful claimants. A Time magazine article published on 15 December 1997 entitled Panama: The
big switch stated that there was a risk the Panama Canal Authority
would become riddled with elite forms of cronyism, nepotism, and
political favoritism. A 2006 article published in the German periodical
Spiegel Online cites a vocal Panamanian critic of the Panama Canal
Authority who said that the family of the president of the board of
directors of the Panama Canal Authority controls the countrys largest construction company, alleging there was a conflict of interest over
contracts for the current expansion project.6 The criticism extended to
all the members of the board of directors who were allegedly part of
the countrys ruling families and essentially a mafia. The moral of
the story, again, is not in its factual basis but its politics.
During discussions about the law that created the Panama Canal
Authority in 1996, Jorge A. Tern, president of the Association of Panama Canal Pilots and the Pilots Union (Sindicato de Pilotos), insisted
that Panamanian political parties should participate in the process.7
Tern even met with leaders of the rival Arnulfista Party, the political
party that claims its legacy from Arnulfo Arias, to solicit help when the
document containing most of the disputed material hit the Legislative
Assembly for debate. Tern said that the labor sector of the Panama
Canal was in danger because there were no counterweights ensuring
that canal employees would be given fair treatment. Tern proposed
6
Frank Hornig, A bottleneck in the global economy: Panama wrestles over
canals future. Spiegel Online, October 20, 2006 (http://www.spiegel.de/international/
spiegel/0,1518,443376,00.html).
7
Pilotos rechazan ley que crea Autoridad del Canal El Panam Amrica [Panama
City, Panama], May 30, 1996: 12E.

that there be an external entity that watches and maintains leadership in the employee-employer relationship so that problems can be
handled in a reasonable and expeditious way.8 Joaqun Vallarino, a
member of the Presidential Commission of the Canal, said that if Panama Canal employees would attempt to resolve their labor disputes
using outside leverage it would not be a very nationalist attitude.9
It is unlikely in the future that there would be riots and civil rights or
labor demonstrations on a scale as seen in November 1959 and January 1964, for instance, protesting against the Panama Canal Authority
as a republiquita and planting Panamanian flags around the administration building to try to illustrate that Panamanians constitutional
right to strike does not apply there. What seems more likely is that
Panama Canal labor in league with other national Panamanian labor
organizations would protest possible austerity measures by organizing
sickouts or similar actions causing service disruptions to the Panama
Canals time-sensitive container markets, like the sickout of American pilots and other canal labor in March 1976.
Several very short articles appearing in March and April 2008
describe a peculiar three-month period of chronic congestion at the
Panama Canal resulting in backlogs exceeding 10 days, lines 130 vessels
long waiting to transit, and transit times averaging 53 hours instead of
under 20 hours.10 By June 2008, things had suddenly improved. Ship
agents said the Panama Canal Authority had yet to provide a satisfactory reason for the congestion, noting that the problems had been
widely attributed to an industrial dispute between the canals work
force of 274 pilots. The Panama Canal Authoritys explanation was
that the delays were due to minor repairs to the locks, an explanation
greeted with suspicion by ship agents who thought the delays were
the result of internal issues. One ship agent said, I do think there was
something going on . . . [with] the pilots but as the canal authority said
themselves, there is really no way of proving that. . . . Yes there were
heavy arrivals during February and March but there was obviously
Adversan anteproyecto de ley, La Prensa [Panama City, Panama], July 2, 1996.

Condiciones laborales de Comisin del Canal permanecern iguales La Prensa
[Panama City, Panama], December 27, 1993: 1A.
10
Michelle Wiese Bockmann, Panama Canal transit times fall, Lloyds List, June 11,
2008 (http://www.lloydslist.com/ll/news/panama-canal-transit-times-fall/20017541813.htm;
jsessionid=46B326368A6EA124E5BF00AE1ED423D2)
9
282
chapter thirteen
something else that they wouldnt come out and say.11 The article
continued:
The Panama Canal has repeatedly denied agents claims that pilots
embarked on work-to-rule measures which slowed down transits and
aggravated queues during the busiest time of the year for the crucial
trade artery. But agents outlined several small but timesaving work practices that pilots had stopped, such as providing advance notice of boarding ships at anchorages, which could allow captains to start engines in
advance.
Was the chronic congestion that occurred in the Panama Canal during
February and March 2008 due to minor repairs, or was it an internal
labor issue as ship agents suspected? A protest or a demonstration
does not have to be as dramatic as climbing a chain link fence with
the Panamanian flag in hand as in January 1964. Sometimes a protest
comes in the form of refusing to implement timesaving work practices
that are normally standard procedure. In fact, the etymology of the
word sabotage itself comes from the banal actions of disgruntled
workers who threw their sabots or wooden shoes into the mechanisms of a factory as a form of protest.
The United States bears the exclusive burden through the terms of
the 1977 Neutrality Treaty to act in the event of a threat to the free and
neutral use of the Panama Canal. The treaty has already been invoked
in December 1989 to justify a military invasion. Does a series of protracted service delays constitute enough of a threat to have to invoke
the treaty again? To this authors knowledge the Panama Canal and
Canal Zone have never been struck from an attack by German, Japanese, or Soviet submarines and aircraft. The Panama Canal itself has
never been damaged by communist militants or religious extremists
planting explosives. Vessels have caught fire in the locks and vessels
have sunk in the channel, causing delays only on the order of hours.
For instance, in February 1968 the iron ore bulk carrier Shozan Maru
struck the side of a bank and sunk in the middle of the Culebra Cut.
The ship was refloated and removed in 18 hours and 20 minutes.12
However, an eight-day sickout of American pilots and canal employees in March 1976 caused the most serious disruption in canal service
11
12
Bockmann (2008).
Panama Canal Company, Annual Report (Washington, D.C.: GPO, 1968), 15.

since the six-month closure of the Panama Canal after the Culebra Cut
landslide in 1915.
If chronic disruptions in service were to reach a certain frequency
and magnitude in a waterway that has consistently serviced about 12
percent of all American foreign waterborne trade, it would prompt
United States representatives to invoke the 1977 Neutrality Treaty.
American representatives would probably take one of two courses of
action. An avoidant posture might result in American representatives
traveling to Panama to participate in closed door labor talks between
the Panama Canal Authority and pilots or other employees in a consulting capacity. If the Panamanian employees requested an open door
televised or online meeting it would represent a situation ironically
similar to the 1973 United Nations Security Council Meetings, a venue
for Panamanian rivals and opposition of all sorts to vent their allegations in a court of world opinion. On the other hand, a preventive
posture by American representatives might result in extraterritorial
arbitration using United States laws that government employees cannot strike. A preventive posture could even take the form of threats by
the President to replace the 200300 Panamanian pilots with American pilots, e.g., from the American Pilots Association, until new pilots
could be trained.
The potential to become entangled in the Panama Canal Authoritys
internal labor disputes suggests a wild speculation but one that fits the
pattern of American policy regimes and the two Panamas. A predominantly avoidant regime of a possible future 3rd democracy (c. 2020s
2070s) might try to disentangle the United States from its exclusive
responsibilities by abrogating the 1977 Neutrality Treaty and replacing
it with a multi-non-adjacent nation neutrality pact similar to the 1850
Clayton-Bulwer Treaty. The Clayton-Bulwer Treaty gave Britain and
the United States, as non-adjacent entities, equal responsibilities for
guaranteeing the neutrality of any interoceanic communication across
the isthmus between North and South America. A North American
Free Transit Agreement could be signed by the United States, Canada, Mexico, Panama, and other countries but excluding Asia and
Europe by which all parties to the agreement would mutually guarantee uninterrupted service and the neutrality of the aerospace and
maritime territory surrounding any form of interoceanic communication between the Atlantic and Pacific Oceans.
284
chapter thirteen
C. Conclusion
It would be tempting to conclude from this book that a combination of circumstances is more important than free will when it comes
to choosing to modify a straits physical and human-built environment, conveying flows of goods through it and accumulating wealth,
or asserting territoriality over all of the above. A wise caveat in this
regard is that indeed people make history but never under conditions
of their own choosing.13 This is particularly true in straits. In sum, a
strait is the product of territoriality between adjacent and non-adjacent entities over flows through a unique type of environment formed
by a narrow water passage. The history of an artificial strait like the
Panama Canal unfolds as combination of environmental and human
circumstances converging in a narrow water passage over very long
periods of time or as Braudel might say a story with more than
one history.
13
Turn of phrase adapted from Marx. Dr. Leonard Hochberg, personal communication to author, 1996.
APPENDIX
The following is a list of treaties and other international agreements for an
interoceanic communication through Central and South America signed or
proposed before the 1903 Hay-Bunau-Varilla Treaty. Agreements were compiled from three principal sources including: a) U.S. Congress, Senate, Report
of the Isthmian Canal Commission, 18991901, 57th Cong., 1st Sess., Doc.
No. 54 (Washington, D.C.: GPO, 1901); Manning (1931), and U.S. Congress
(1977b); b) William R. Manning, comp., Diplomatic correspondence of the
United States: Inter-American affairs, 18311860. Vol. 5: Chile and Colombia
(Washington, D.C.: Carnegie Endowment for International Peace, 1935); and
c) U.S. Congress, Senate, Committee on Foreign Relations, Background documents relating to the Panama Canal, Report prepared by Library of Congress,
Congressional Research Service, 95th Cong., 1st sess. (Washington, D.C.:
GPO, 1977b).
The codes in the column Type are the following: A &NA refers to an
agreement between two governments, one adjacent to the route of interoceanic
communication and one non-adjacent; NA & NA refers to an agreement
between two non-adjacent governments; and A & FPE refers to an agreement between an adjacent government and a foreign private enterprise.
Year
Treaty Name
Signed
Type
1903
Hay-Herran Treaty
22 January 1903 at
Washington, D.C.
A & NA
1902
Hay-Corea Treaty (Draft)
Working draft submitted to A & NA

Hay by Corea in letter dated
14 May 1902
1901
Hay-Pauncefote Treaty
18 November 1901 in
Washington, D.C.
NA & NA
1900
Treaty between United

States and Great Britain
5 February 1900
A & FPE
1900
Third Wyse Contract

Extension
20 (or 25) April 1900 (Ten A & FPE

years to 31 October 1910);
October 1894 New Panama
Canal Company formed
1898
Concession to
Interoceanic Canal
Company (Nicaragua)
31 October 1898
A & FPE
286
appendix
Table (cont.)
Year
Treaty Name
Signed
Type
1897
Purchase of Contract by
Atlas Steamship Company
30 September 1897
A & FPE
1894
Transfer of Contract to
Maritime Canal Company
3 November 1894
A & FPE
1893
Second Wyse Contract

Extension to 1904
4 April 1893 (Ten years from A & FPE

31 October 1894) at Bogota
1892
Contract with Nicaragua

December 1891
Mail Steam Navigation and
Trading Company
A & FPE
1890
First Wyse Contract

Extension
10 December 1890 in
Bogota
A & FPE
1889
Maritime Canal Company

of Nicaragua Incorporated
20 February 1889
(Concession declared
forfeited 27 October 1899
due to abandonment of the
work)
A & FPE
1888
Concession by Costa
Rica to Nicaragua Canal
Association (Supplement
to 1887 Concession from
Nicaragua)
31 July 1888
A & FPE
1888
Contract between Costa

Rica and Maritime Canal
Company
July 1888
A & FPE
1887
Concession to Nicaragua
Canal Association
24 April 1887 (Ratified)
A & FPE
1884
Frelinghuysen-Zavala
Treaty
1 December 1884 in
Washington D.C.
A & NA
1881
Treaty between Colombia

and Spain
1881
A & NA
1878
Modification of Wyse
Contract on behalf of the
International Interoceanic
Canal Association of
France
20 (or 23) March 1878;

A & FPE
French Panama Canal
Company in 1881; failed in
December 1888; liquidation
February 1889
1877
Contract with F. A. Pellas
16 March 1877
A & FPE
appendix
287
Table (cont.)
Year
Treaty Name
Signed
Type
1876
Contract with Lucien N.B.

Wyse
Original concession signed

May 1876
A & FPE
1869
Treaty between Costa Rica

and Nicaragua
June 1869
A & NA
1867
Treaty Between the United

States and Nicaragua
21 June 1867
A & NA
1860
Treaty between Nicaragua

and Great Britain
11 February 1860
A & NA
1860

and Great Britain
28 January 1860
A & NA
1859

and France
11 April 1859
A & NA
1856
Convention between the

United States and the
Republic of New Granada,
for the adjustment of
claims
Not signed. Proposed by

A & NA
Secretary of State Marcy, 3
December 1856 to American
treaty negotiators
1856
and
later
Treaty between Colombia

and France
1856 and 1892
A & NA
1852
Treaty between United

States and Costa Rica
10 July 1851
A & NA
1850
and
later
Treaties between Nicaragua Spain (1850), Belgium

and various governments
(1858), Italy (1868), Costa
Rica (1869), Costa Rica
(1869), Germany (1896)
A & NA
1850
Clayton-Bulwer Treaty
19 April 1850
NA & NA
1850
Treaty between Costa Rica

and Spain
May 1850
A & NA
1849
Hise Treaty with

Nicaragua
Contract between
Nicaragua and American
Atlantic and Pacific ShipCanal Company
21 June 1849 in Guatemala

City, Guatemala
27 August 1849 in Leon,
Nicaragua
A & NA
1849
A & FPE
288
appendix
Table (cont.)
Year
Treaty Name
Signed
1848
and
later
Treaties between Costa

Rica and various
governments
Hanse Towns (1848),

A & NA
France (1848), Great Britain
(1849), Netherlands (1852),
Belgium (1858), Italy (1863),
Germany (1875), Guatemala
(1895), Honduras (1896)
1848
Contract for Panama

Railroad Company of
New York
A & FPE
28 December 1848;
Reformed 15 April 1850
and 16 August 1867; articles
inserted 1876 and 1880;
amended 18 August 1891
1847
Contract between New

Granada and Mateo Klein
(Panama Company of
Paris) for Railroad
10 May 1847
A & FPE
1846
Bidlack-Mallarino Treaty
12 December 1846 in
Bogota, New Granada
A & NA
1844
Convention for Isthmian

Mail Transit between New
Granada and the United
States
6 March 1844
A & NA
1843
Abstract of Instructions by Mentioned in Blackford to

Granadian Government for Upshur, 3 November 1843
concluding a treaty with
the Maritime Nations for a
Panama Canal
A & NA
1836
Decree granting privilege

for intermarine
communication to Charles
Biddle
A & FPE
22 June 1836
Type
INDEX
1st Universal Congress of the Panama
Canal 4243
Accin Comunal 221
Adams-Ons Treaty 9596
Alberto Alemn Zubieta 267
Aleutians 94
Alfred Thayer Mahan 173, 246, 259
Andrew Jackson 125, 128, 136
Anglo-American Convention of
1818 96
Appalachian Mountains 51, 91, 106107
April 1856 riots 144145
Arctic Ocean 274275
Arkansas River 103n.1, 171
Army Corps of Engineers 41, 49, 107,
192
Arnulfo Arias 163, 221, 222, 225, 229,
231, 236, 237, 248, 255, 279, 280
arrabal 140, 146, 148, 150, 201, 214
artificial strait 3, 5, 8, 1516, 24, 273,
284
Atlantic-Pacific Interoceanic Canal
Study Commission 38
Audiencia of Panama 7677
Azuero 67, 71, 7576, 138, 140, 162,
263
Barbados 28, 182
Baxter and Triska 3, 5, 67, 8, 15
Belisario Porras 201, 214215
Benjamin A. Bidlack 128129, 141
Benjamin Disraeli 135, 159
Bidlack-Mallarino Treaty 123,
126130, 133, 137, 141, 143144, 147,
150151, 167, 170
Bill of Rights 193194
Braudel 69, 71, 73, 284
Bridge of the Americas 43
bulk carriers 40, 47, 54, 5758, 6061,
275
cabildo 7678
Cadiz 24, 78
Calvin Coolidge 219
Canal Zone 10, 1416, 2528, 35, 64,
106, 115, 119, 123, 185, 189190,
192198, 201210, 212213, 215217,
220222, 224228, 230248, 251,

254255, 257258, 266n.13, 277278,
282
Carville Earle 88
Central Pacific Railroad Company 104,
119, 122123
Chagres 2021, 2425, 2930, 3638,
4849
Charybdis 12
Chief Engineer John F. Stevens 2729,
3536
Chief Engineer John F. Wallace 2728
Christopher Columbus 24
Civil Rights 148, 194, 216, 223224,
239, 281
Clark Memorandum 219
Clayton-Bulwer Treaty 126127, 134,
151, 155, 173, 186, 192, 252, 283
Colombia 33, 5152, 8183, 99, 118,
123, 128, 135138, 142143, 148, 150,
152, 155, 158164, 166168, 170, 179,
206, 210, 232
Colombian Exchange 23
Coln 10, 26, 30, 36, 51, 53, 67,
148149, 163, 178, 195196, 215, 222,
226227, 233235, 238, 266
Coln Free Trade Zone 13, 266
Columbia River 94, 9697, 99, 103n.1,
104, 109, 112, 122
Committee of Provisional Government
of the Republic of Panama 165
container ships 4041, 47, 58, 60, 260
Convention of Constantinople
(Istanbul) 155
Convention of the Law of the Sea 3,
78
Corfu Channel 68
Credit Mobilier 117
cruise ships 47, 58, 60
Cuba 25, 94, 96, 99100, 172, 177,
181182, 187, 202n.6, 220
Culebra 10, 29, 3234, 38, 4143, 257,
268, 282283
Cumberland. See National Road
Czar Alexander 97
Dardanelles 137
DeConcini reservation
252253
290
index
Defense Sites Agreement 230, 249

democracy 8889, 217
De Lesseps 28, 33, 155, 158
Edward Fox 67, 6971, 7374, 82, 110,
123, 255
Elihu Root 181, 202n.6
El Nio 10
Emperor Louis Napoleon 158
encomendero 7580, 82
entangling alliances 86, 9091,
101102, 126128, 130, 151, 153154,
157, 168, 244, 277
Erie Canal 103, 108, 114
Federalist 81, 147, 150, 203, 205206
Federation of Panamanian Students
232
Fernand Braudel. See Braudel
Figueroa Navarro 7071, 255
Florencio Arosemena 222
Florida 9496, 98, 110, 113, 181
flows 79, 1213, 1516, 44, 47, 51, 63,
69, 76, 139, 141, 143144, 169, 224,
266267, 273, 274, 275, 276, 284
Forest Reserve Act 118
Fox. See Edward Fox
franchises 104, 117122, 131, 135, 203
Franklin D. Roosevelt 220, 278
Frelinghuysen-Zavala Treaty 153154
French Panama Canal Company 19,
29, 118, 147, 158160, 192, 197
Gadsden Purchase 125
Gaillard. See Culebra
Gatun Lake 5, 10, 32, 37, 39, 4143,
257
general cargo 47, 58, 61, 275
Geneva Convention on the Territorial
Sea and the Contiguous Zone 7
George Dewey 178179, 184
George H. W. Bush 254
George Washington 2930, 86, 91,
140, 220
George W. Bush 271
goods, people, finances, and
messages 1213, 1516, 63, 69, 78,
82, 144
Great American Interchange 22
Great Colombia 81, 90, 101, 123, 138,
140
Great Depression 54, 176, 219
Greece 7n.14, 28
Grenadine Confederation 81, 148
Grover Cleveland 153154

Guadeloupe 28
Guantnamo Bay 172, 182
Guillermo Endara 255256
Gulf of Mexico 94, 96, 100, 107
Hamburg 178
Harmodio Arias 223, 227228, 231,
248, 279
Harry S Truman 221
Hawaiian Islands 94, 172173, 177,
184
Hay-Bunau-Varilla Treaty 15, 83, 86,
88, 106, 151, 164166, 169170, 174,
189190, 192193, 195, 197, 202206,
208209, 212213, 216, 219226, 237,
240, 242, 248, 279, 285
Hay-Herrn Treaty 164166, 206, 209
Hay-Pauncefote Treaty 151, 154155,
168, 173, 186, 192, 249, 252
Henry Kissinger 242, 246
Henry Morgan 79
Hise Treaty 126127, 132, 154
Holy Alliance 98, 100
House Committee on Foreign
Affairs 157, 159
Hudson River 103, 108
Hochberg 7n.14, 273n.1, 284n.13
Hull-Alfaro Treaty 227228, 243,
248249
human-built environment 910, 12,
14, 16, 2529, 35, 273274, 284
International Straits of the World 2,
5, 9
Interoceanic canals 3, 5, 8, 15, 127, 213
Isthmian Canal Commission 16, 19,
20, 2430, 3238, 44, 192198, 204,
257, 279
isthmus 19, 20, 43, 126, 134, 152, 283
Italy 28
Jan Surez 70, 74, 163n.17, 255
James A. Blaine 153
James B. Eads 157
James K. Polk 125, 129131, 137, 157
James Madison 9596, 98, 108
James Monroe 95101, 133, 156157,
159, 173, 180181, 219
January 1964 233236, 239, 258, 281,
282
Jimmy Carter 86, 243, 253, 277278
Joe Biden 246
John F. Kennedy 220, 233
index
John Forsyth 128
John Hay 104, 123, 165, 179, 184,
204205
John Quincy Adams 88, 90, 97,
99101, 136, 156
Joint US-Panama-Japan Commission
to Study SeaLevel Canal and
Alternatives 38
Jorge E. Ritter 269270
Jose Antonio Remn Cantera 163, 228,
248, 279
Jose de Obalda 204
Kellog-Alfaro Treaty 226227, 240
Kissinger-Tack Statement of
Principles 242
Kiel Canal 3, 8, 20, 35
La Boca 10, 36, 204
La Compagnie Universelle du Canal
Interoceanique. See French Panama
Canal Company
Labor Code 238, 269270
Lake Erie 103, 108, 114
League of Nations 227, 240
Leonard J. Hochberg. See Hochberg
Los Santos 71
Louisiana Purchase 9596, 107, 171,
247
Louisville KY 106
Lucien N.B. Wyse 155, 158, 160
Maj. George Washington
Goethals 2930
malaria 2627
Manchester Canal 35
Manuel Mara Mallarino 129
Manuel Noriega 239, 248, 253254,
279
maritime-commercial 49, 63, 69, 73,
7583, 138, 140, 145150, 161163,
169170, 201, 214217, 229, 231232,
237239, 247248, 254256, 263264,
266, 278
Martinique 28
maximum sustainable capacity 40,
267
Mediterranean 20, 2324, 28, 69, 78,
131, 137, 179, 193194, 201
Mexican War for Independence 96
MexicanAmerican War 125, 171
Miraflores 10, 4243, 257
Mississippi River 51, 9496, 103104,
106110, 115, 122, 157, 171
291
Monroe Doctrine 90, 93n.4, 133,

156157, 159, 173, 180181, 219
Mosquito Kingdom 132, 154
Napoleon Bonaparte 95, 157158
National Council of Private
Enterprise 256
National Guard 222, 229, 232239,
248, 253255
National Police 214, 222223,
228229, 232, 248
National Road 103n.1, 104, 107108,
119
National University 225, 231
Neutrality Treaty 134, 243244, 246,
252253, 270271, 279, 282283
New French Panama Canal
Company 19, 29, 118, 160, 192
New Granada 51, 76, 78, 81, 123,
125128, 130131, 133145, 147148,
150, 168, 259
New Orleans 95, 103n.1, 107, 110, 112,
157, 190
New York 33, 5152, 103, 106108,
182, 184, 221, 241
New York harbor 35
Nicaragua 1921, 24, 32, 5152,
126127, 132, 147, 153154, 157, 160,
167
North Sea Canal 35
Northwest Passage 9, 274275
October 1968 237238, 248, 254
Odysseus 1
Odyssey. See Odysseus
Ohio River 103n.1, 104, 106107
Omar Torrijos 163, 238, 243, 248, 253,
279
Oregon Country 9697, 109, 112, 125,
130, 137, 171
Oregon Territory 51, 104, 112, 125,
171
Oregon Treaty 109, 125, 137
Panama Canal Authority 5, 12, 1516,
21, 3944, 54, 58, 60, 257260,
262264, 266271, 273274, 276,
280281, 283
Panama Canal Commission 10, 15, 39,
41, 251, 257258, 267, 269
Panama Canal Company 15, 19, 29,
118, 147, 158160, 192, 221, 238, 251,
257, 285, 286
Panama Canal Master Plan 39
292
index
Panama Canal Pilots 268269, 280

Panama Canal Treaty 243, 244, 248,
251
Panama Canal/Universal Measurement
System 260
Panama City 10, 26, 30, 51, 67, 7071,
75, 7779, 144145, 148149,
161163, 196, 212, 215, 222, 224, 227,
231, 233, 234, 235, 236, 238, 240, 241,
256, 263, 266
Panama Congress 48, 88
Panama Railroad 10, 16, 29, 44, 47,
4953, 63, 74, 78, 82, 127, 132133,
135, 142148, 150, 161, 164, 196198,
201202, 221, 226, 258, 259, 275
Panameismo 221
Pedro Miguel 10, 4143
Philippines 172, 182, 184
physical environment 10, 12, 20,
2425, 29, 3032, 43, 172, 273, 274
Pittsburgh 106
policy regimes 16, 8689, 101, 171,
186, 192, 244, 276277, 283
Portobelo trail 48, 49
Potos 75
Prince William Sound 96
public land grants 110, 112115, 117
Puerto Rico 25, 94, 99, 172, 181
rates of pay 14, 199
Red River 171
refrigerated ships 47, 58, 60
republic 8889
Rio Grande 30, 37, 114
Rio San Juan 20, 5253, 147
Robert F. Kennedy 220
Robert W. Fogel 121
Roberto Francisco Chiari Remn 235
Rodolfo E. Chiari 225
Rodrigo de Bastidas 24
Ronald Reagan 246, 254
Roosevelt corollary 133, 159160,
180
Royal Road and Las Cruces Trail 16,
44, 47, 50, 63
Russia 9798, 125, 137, 186
Rutherford B. Hayes 135, 152, 174
Samoa 94, 172
Santiago 67, 71, 82, 238
Scylla 12
Senate Foreign Relations Committee
61, 86, 90, 246
Seville 7678
sickout 268, 281282

social saving 121122, 175
Soviet Union 7n.14, 187, 247
Spain 24, 28, 4748, 67, 7478, 8182,
85, 90, 94101, 109, 128, 130, 136,
138, 158, 162, 172, 181, 232, 233,
275
Spanish-American War 25, 174,
178n.12, 181182, 184
Special Engineering Division 38
Spooner Act 164, 166, 192193, 195,
204, 209210
St. Lawrence Seaway 8
St. Louis 51, 104, 125
State of California 104, 109, 119120,
123, 176
States rights 114, 119, 123, 138139,
149, 162, 169, 203, 209, 216
Strait of Gibraltar 9, 20
Strait of Malacca 20
Straits of Magellan
Suez Canal 3, 8, 33, 35, 54, 61, 131,
135, 155, 157159, 179, 184, 274275
Taft Agreement 15, 189, 212, 226
tankers 47, 58, 60
Tehuantepec 19, 21, 51, 52
territorial-administrative 6971, 78,
79, 8183, 139, 140, 148, 161, 169,
214215, 217, 221, 223, 232, 238, 248,
254, 256, 258, 263, 270, 278
territoriality 79, 1316, 6364, 149,
169, 172, 186, 216, 225, 232, 247, 270,
273, 276278, 284
The Royal Road 16, 44, 4748, 50, 63
Theodore Roosevelt 25, 28, 36, 86,
133, 159160, 166169, 174, 180181,
192193, 195197, 204, 212, 219,
277280
Third Locks Project 38
Third Set of Locks Project 5, 3942,
54, 260, 262264, 273
Thomas Jefferson 95, 98, 156157
Thomas Paine 93
Thousand Days War 164
transcontinental railroads 2729, 54,
104, 115, 119, 121123, 158, 171, 173,
190, 197, 203, 209, 211, 277
Treaty of Guadalupe Hidalgo 109, 125,
171
Treaty of Mutual Understanding and
Cooperation 230, 248
Treaty of San Ildefonso 9495
Trent Lott 259
index
Trinidad 28
Tripartite Convention 184
twenty-foot equivalent unit 260
UNCLOS 25
Union Club 256
Union Pacific Railroad Company 114
United Nations Conference on the Law
of the Sea. See UNCLOS
United Nations International Law
Commission 67
United Nations Security Council 234,
240241, 283
United States Virgin Islands 182
United States waterborne trade 61
Upper California 125, 130, 171
293
Vasco Nuez de Balboa 24

vehicle carriers 47, 58, 60
Veraguas 76, 82, 138, 162, 222
Viceroyalty of New Granada 76, 78
Viceroyalty of Peru 4849, 7579
Vietnam 242, 245246
wagon road 51, 103, 107, 110, 113,
115, 117, 125
Watergate scandal 243
Wilson v. Shaw 209, 246247
World War I 54, 182, 189
World War II 3839, 54, 174176,
199, 219, 275
yellow fever
2527

The Panama Canal (International Straits of The World) - Martinus Nijhoff (2010)

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The Panama Canal

The Panama Canal

This book is printed on acid-free paper.

ISBN: 978 90 04 17728 4

THE ENVIRONMENT OF A STRAIT

FLOWS THROUGH THE ENVIRONMENT

TERRITORIALITY OVER FLOWS THROUGH

5. American Territoriality in Geographic Perspective ................ 85

7. Interoceanic Transportation and The Two Panamas

B. The Two Panamas Under the Centralized Republic of

Appendix .............................................................................................. 285

LIST OF FIGURES AND MAPS

agreement for interoceanic communication through Central and South

A. Straits in Comparative Perspective

There have been doubts that comparisons could be made between

1. Straits of the International Straits of the World

1. Natural and Artificial Straits

Interestingly, Lapidoth-Eschelbacher (1982, 247 note 3) says, It might be asked

International Law Commission, which was retained in all of its major

There has been a strong tendency, as generally noted by many legal

See Pharand and Legault (1984) for a visual explanation.

B. The Three Circumstances of a Strait: Environments,

Figure 2 is a 3D perspective view of the most important elements

Data sources compiled from various publicly available GIS data.

2. The physical and human-built environment of the contemporary Panama Canal

there is a relationship between patterns in global ocean circulation

2.1 Flows of Goods, People, Finances, and Messages in Transit

Territoriality over a straits environment and everything that flows

to investigate the Panama Canal as an artificial strait in comparison

THE ENVIRONMENT OF A STRAIT

THE ENVIRONMENT OF THE ISTHMUS OF PANAMA

the environment of the isthmus of panama

See methods used by Blakey (2009).

rapidly dispersed marine larva like tonnoidean gastropods (marine

Alan G. Beu, Gradual Miocene to Pleistocene uplift of the Central American

the environment of the isthmus of panama

Panama adds insight to what is already known from historical records

the environment of the isthmus of panama

C. How an Isthmus Became an Artificial Strait

excavation in what it called a radical change of policy. The Commission said:

Modifying the human-built environment meant bringing in supplies,

Isthmian Canal Commission, Annual Report (Washington, D.C.: GPO, 1905), 6.

the environment of the isthmus of panama

and yellow fever combined, including diarrhea and enteritis (57

See the Isthmian Canal Commission Annual Report (1905, 344).

subsidizing more nutritious well-cooked foods, and more carefully

the environment of the isthmus of panama

often refer to what the company expected to spend on excavation and

3. The physical environment of Panama in 1901 before American construction

the environment of the isthmus of panama

the environment of the isthmus of panama

For instance, the Commissioners noted that the only excavation

plan for a much larger set of navigation channels. The Commission

For an example of the problems of simplifying assumptions about relationships

the environment of the isthmus of panama

Ordinary American engineers stuck in field conditions who had had

Stevens advocated a lock canal and as Chief Engineer attached his

the environment of the isthmus of panama

Isthmian Canal Commission Annual Report (1904, 40).

Finally, lock construction under dry conditions was to proceed as

the environment of the isthmus of panama

During the establishment of the tripartite commission in 1986, a

Panama Canal Authority (2005), Autoridad del Canal de Panam (2006).